Zillow Group Inc (NASDAQ:Z) (NASDAQ:ZG) shares are trading lower on Wednesday after New York Attorney General Letitia James and four other states filed an antitrust lawsuit accusing the company of paying a major competitor to exit the apartment rental advertising business.
What Happened: The Federal Trade Commission sued Zillow and Redfin over an unlawful agreement that removes Redfin as a competitor for placing advertising of rental housing on internet listing services.
State prosecutors also allege Zillow structured a deal worth $100 million to convince Redfin to exit the multifamily rental market and hand over its advertising clients, eliminating significant competition in the process.
The complaint alleges that the deal involved two contracts signed in February 2025. One contract allegedly involved paying Redfin to stop advertising apartments with 25 or more units and transfer its clients to Zillow. The other allegedly banned Redfin from competing in this market for up to nine years and required the company to show only Zillow’s rental listings.
Redfin cut about 450 jobs in its rental advertising division after framing the move as a “partnership” with Zillow. The agreements could eventually expand to cover all apartment buildings, not just larger properties, likely leading to higher prices and worse terms for multifamily unit advertising.
“Paying off a competitor to stop competing against you is a violation of federal antitrust laws,” said Daniel Guarnera, director of the FTC’s Bureau of Competition.
“Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market—one that’s critical for renters, property managers, and the health of the overall U.S. housing market.”
The market for online rental advertising is dominated by three major players — Zillow, Redfin (which operates Rent.com), and CoStar (owner of Apartments.com) — who collectively control 85% of industry revenues.
Z Price Action: At the time of publication on Wednesday, Zillow shares were trading down by 3.31% to $74.44, according to Benzinga Pro.
Read Next:
More than 50 brokerages adopt Zillow Showcase as go-to tool for listing marketing innovation
Image: Shutterstock