On September 30, 2025, the Federal Trade Commission (“FTC”) sued Zillow and Redfin, alleging they entered into illegal agreements that eliminated Redfin as a competitor in the internet listing services (“ILS”) market. This lawsuit marks the first antitrust conduct case brought by the FTC under President Trump’s second administration.
The complaint details Zillow and Redfin’s February 2025 partnership and content license agreements in which Zillow paid Redfin $100 million to (1) terminate existing contracts with advertising customers, (2) exclusively syndicate Zillow listings on its sites, and (3) stop competing in the market for multifamily rental listings for up to nine years. The complaint alleges that Redfin then terminated approximately 450 employees who had supported its multifamily advertising business and aided Zillow in hiring some of them.
The FTC’s complaint alleges these agreements violated Section 1 of the Sherman Act, Section 7 of the Clayton Act, and Section 5 of the FTC Act. The lawsuit seeks to unwind the agreements and consider potential divestitures of assets or other structural relief to restore competition. In announcing the lawsuit, Daniel Guarnera, Director of the FTC’s Bureau of Competition, emphasized that “[p]aying off a competitor to stop competing against you is a violation of federal antitrust laws.” Attorneys General of Arizona, Connecticut, New York, Virginia, and Washington brought a similar suit the following day, alleging the same anticompetitive conduct.
Companies should be aware that strategic exits can attract scrutiny as agreements in restraint of trade and/or as nonreportable deals, digital platforms remain an enforcement focus area, and structural remedy demands are a risk for partnership agreements.
Background on the Partnership
According to the FTC’s complaint, the relevant markets are (1) ILS advertising for rental properties and (2) ILS advertising for multifamily buildings, with 25 or more units. The agreements only prescribe Redfin’s conduct with respect to advertising for multifamily buildings but allegedly affect competition in both relevant markets. Rental ILSs, like Zillow and Redfin, serve two sets of customers – advertising rental companies and prospective renters. Advertisers pay to list available rental units and prospective renters search for housing.
The complaint alleges that both markets are highly concentrated, with HHIs over 2,500 and the agreements result in a change in concentration greater than 200. It argues that Zillow has market power and that the three large players, Zillow, CoStar, Redfin, and their respective brands,[1] account for 85% of revenue for rental ILSs with nationwide presence. The complaint does not list individual market share calculations, and it argues that barriers to entry are high since ILSs need a large number of listings to attract renters and a large renter audience to have value for rental advertising customers.
The complaint considers the partnership as an “end run around competition” in two forms. It alleges the partnership is a horizontal agreement to stop competing head-to-head, in violation of Section 1 of the Sherman Act. It also considers the partnership as an acquisition of a rival’s assets, combining two of the three largest ILSs, in violation of Section 7 of the Clayton Act.
Key Takeaways
- Strategic exits can garner scrutiny:
- Similar to prior administrations, the FTC under the second Trump administration is investigating conduct that may not be reportable under the HSR Act. While reviewing nonreportable deals is nothing new – both the DOJ and FTC have jurisdiction over nonreportable transactions – we saw a renewed focus on this issue in the Biden administration including investigations into acquihires and minority investments with strategic rights, as detailed in the FTC’s January 2025 6(b) report on Partnerships Between Cloud Service Providers and AI Developers. It remains to be seen whether the FTC will pursue this type of investigation going forward, but companies should evaluate whether similar agreements involving the transfer of assets and employees are likely to engender interest from the antitrust authorities.
- The FTC under the second Trump administration has also signaled a return to traditional antitrust enforcement. While companies should already be aware of the risks associated with agreements that purport to eliminate head-to-head competition, FTC is following through on its enforcement approach for this conduct by alleging a Sherman Act violation in addition to Clayton Act and FTC Act violations.
- Digital platforms remain in the crosshairs:
- The FTC has been clear in its focus on the technology industry, among other sectors, and this latest case signals the FTC’s focus on policing conduct in this space. Companies within this sector should remain vigilant and anticipate scrutiny of transactions and agreements that may function similarly to an acquisition.
- Structural remedies are on the table:
- The Trump administration has reversed the Biden-era blanket policy disfavoring merger remedies, and here, the FTC is pursuing structural relief for these partnership agreements. While injunctive relief is a common request for antitrust conduct matters, the FTC is not only seeking injunctive relief, but also potential divestitures of assets. Companies engaging in these types of agreements should be on notice that possible consequences could go beyond merely ending the agreements and prohibiting similar ones in the future. Here, the FTC is treating these partnership agreements in the same vein as an acquisition that needs to be unwound.
[1] Zillow also runs Trulia, HotPads, and StreetEasy, while Redfin operates Rent.com and ApartmentGuide. CoStar owns Apartments.com, ApartmentFinder.com, and ForRent.com.
