Minutes before a high-stakes trial was about to begin, the Federal Trade Commission (FTC) announced that Zillow has agreed to “unwind” its $100 million partnership with Redfin in the rental listing market, after it accused Zillow of an unlawful buy-out to decrease competition for rental listings.
Redfin will be required to re-start its rental business within six months, according to the FTC, and “amend” other aspects of the agreement, but will still syndicate Zillow’s listings.
“This kind of payment to a competitor to exit a market and stop competing violates the antitrust laws. This settlement delivers better, quicker, more certain results for both renters and property management companies than we would have been able to achieve after prevailing at trial,” said Daniel Guarnera, director of the FTC’s Bureau of Competition, in a statement.
Internal documents as part of the lawsuit showed Zillow had pursued the “syndication” deal aggressively since at least early 2023. Besides the $100 million up-front payment, Zillow had expected to share around $300 million more in lead revenue with Redfin, but saw huge benefits in quickly growing its inventory through essentially acquiring all of Redfin’s rental customers.
Redfin, on the other hand, framed the settlement as a win for its business (notably, the partnership was agreed to before it was acquired by Rocket).
“Today’s resolution is a significant win for Redfin and consumers across the country,” a Redfin spokesperson said in a statement. “Renting is the starting point for millions of people on the path to homeownership, and a foundational part of the Redfin journey. This agreement allows us to maintain our rental partnership with Zillow through at least 2030 while building and investing in a standalone rentals business of our own.”
A Zillow spokesperson also framed the agreement as “great news for renters, housing providers and the rental market broadly.” Zillow and Redfin will be offering “standalone multifamily advertising products,” something that will launch next year.
In its own post, Zillow claimed the settlement was “reaffirming” the partnership.
“Our syndication partnership with Redfin has already expanded access to multifamily listings across multiple platforms, bringing more leads and leases to property managers and more options to renters,” said Michael Sherman, general manager and SVP of Zillow Rentals, in a statement. “Now, with the ability to offer more multifamily advertising solutions in addition to the existing partnership, we can do even more to support the marketplace.”
The lawsuit shone a spotlight on the whole rental listing market, with the FTC and five states (Arizona, Connecticut, New York, Virginia and Washington) arguing that it was “highly concentrated” and alleging Zillow pressured Redfin to agree to the deal as it struggled to compete with CoStar’s larger rental portfolio. Zillow denied this, and countered that Redfin’s business was floundering and that syndication deals like this are common.
Litigation over the deal isn’t necessarily over, either, as Zillow shareholders are suing the company for alleging misleading investors about antitrust risks related to the partnership.
Part of the settlement requires Zillow to allow its customers to re-negotiate their contracts “without cost or penalty,” which the FTC argued will allow them “to benefit from the return of an important competitor.” Zillow must also provide “employee information” to Redfin and waive any non-competes or “other impediments” that could prevent these employees from accepting employment with Redfin.
Redfin laid off around 450 employees after striking the deal, with court documents showing that Zillow had sought to bring on some targeted group of high-performing.
For its part, Redfin is required to invest a certain amount into its rental business and make a “multiyear commitment” to continue supporting rental listing services.
Both companies are also required to notify the FTC if they enter into any syndication agreement “that contains a provision that restricts the ability of either party to compete for ILS (internet listing service) customers.” The agreement is still subject to approval by a judge.
This is a developing story. Stay tuned to RISMedia for updates.
Editor’s note: this story was updated at 9:54 a.m. eastern time with comments from Zillow and additional information.
