Virginia is suing real estate listing firms Zillow and Redfin alleging they’ve agreed not to compete in the market connecting landlords to potential tenants.
Seattle-based Redfin agreed earlier this year to get out of the internet listing service business where Zillow, also based in Seattle, is a major player in return for a $100 million payment, a lawsuit filed by Attorney General Jason Miyares alleges.
The lawsuit asks the U.S. District Court in Alexandria to find the two firms violated federal antitrust laws — the statutes designed to protect Americans from the high prices monopolies and cartels can charge — and to order steps to restore competition to the internet listing market for multifamily housing.
The lawsuit, joined by the attorneys general of Arizona, Connecticut, New York and Washington state, comes a few days after the U.S. Federal Trade Commission filed a similar legal challenge.
The Virginia lawsuit said only a handful of firms dominate the market. Besides Zillow and Redfin, they include Arlington-based CoStar Group and its Apartments.com service.
“For years, these companies have competed fiercely to sell advertising to property managers looking to rent their available units. But Zillow has no interest in continuing to compete with Redfin on the merits of its rental advertising offering,” the lawsuit reads.
With the $100 million payment from Zillow to Redfin, Redfin agreed to stop selling multifamily housing advertising, to end existing advertising contracts and to shift those customers to Zillow, the lawsuit alleges.
After this, Redfin fired hundreds of employees and turned over its most sensitive information about the multifamily housing listing business to Zillow, the lawsuit says.
“This agreement is nothing more than an end run around competition that insulates Zillow from head-to-head competition on the merits with Redfin for customers advertising multifamily buildings,” the lawsuit reads.
The FTC in a separate lawsuit made the same points, asserting that while Zillow and Redfin framed their agreement as a partnership, it just insulates Zillow from competition.
“Paying off a competitor to stop competing against you is a violation of federal antitrust laws,” said Daniel Guarnera, director of the commission Bureau of Competition.
Zillow said its agreement with Redfin “benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms. It is pro-competitive and pro-consumer.”
Redfin said it “strongly disagrees with the allegations and is confident we will be vindicated by a court of law.”
“By the end of 2024, it was clear that the existing number of Redfin advertising customers couldn’t justify the cost of maintaining our rentals sales force. Partnering with Zillow cut those costs and enabled us to invest more in rental-search innovations on Redfin.com, directly benefiting apartment seekers,” the company said.