Washington and four other states file housing-related antitrust violation lawsuit

According to allegations in a lawsuit filed today by Washington and four other states, Zillow and Redfin violated antitrust laws when they struck a deal earlier this year that cements Zillow’s dominance in the market for online rental ads.
 
Property listing services, also called internet listing services, are one of the most important tools for Washingtonians looking for rental housing. These kinds of services allow people to search for available rentals, compare multiple properties, and filter by price, location, number of bedrooms, and accessibility.
 
Earlier this year, Seattle-based Zillow agreed to pay Redfin $100 million in exchange for Redfin exiting the internet listing service business for multifamily properties with 25 units or more. Redfin, also based in Seattle, agreed to transition property management clients to Zillow, and the agreement even required Redfin to financially incentivize its sales representatives to shift clients to Zillow. Together, the complaint says, the agreements effectively eliminated a major competitor for Zillow in the market for multifamily property rental listings. Shortly after the agreement, Redfin moved quickly to dismantle its multifamily rental internet listing service business, firing about 450 employees.
 
“Amid a housing crisis in Washington, ensuring robust competition in rental advertising is vital,” Attorney General Nick Brown said. “Enforcing our antitrust laws to keep the marketplace fair, protect consumers, and prevent companies from building monopolies is a priority for our office.”
 
Under a separate agreement with Zillow, Redfin also agreed to exclusively display on its websites Zillow’s rental listings for large multifamily properties. The lawsuit alleges that that essentially turned Redfin into another arm of Zillow’s internet listing service for those big rental properties.
 
The Federal Trade Commission has also filed a lawsuit against Zillow and Redfin in federal court in Virginia, alleging the deal between the companies violates antitrust laws by eliminating competition.
 
Zillow began operating a rental internet listing service in the 2010s and has steadily grown its market share through a series of acquisitions, including of competitors HotPad and Trulia. The company now publicly touts that it has the largest audience and is the most searched listing service in the market.
 
Redfin entered the rental internet listing service market in 2021 when it acquired Rentpath, which owned Rent.com, ApartmentGuide.com, and Rentals.com, and competed aggressively until it struck the deal with Zillow earlier this year.
 
In the complaint against Zillow and Redfin filed in the U.S. District Court for the Eastern District of Virginia, the Washington Attorney General’s Office and the attorneys general of Arizona, Connecticut, New York, and Virginia argue that the companies violated the Sherman Act by unlawfully agreeing to eliminate competition and engaged in an unlawful acquisition in violation of the Clayton Act. The states are asking the court to issue an order to restore competition and prevent future violations.
 
Assistant Attorneys General Tyler W. Arnold and Amy N. L. Hanson and Paralegal Michelle L. Oliver are working on the case for Washington.
 
A copy of the complaint is available here. 

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