Zillow, Redfin fail to end FTC lawsuit claiming they suppressed rental competition

A federal judge has refused to throw out the FTC and state AGs’ antitrust case against Zillow and Redfin over their $100 million rentals partnership, so the lawsuit will proceed toward discovery and trial rather than ending at the motion‑to‑dismiss stage.

What the case is about

• The FTC alleges Zillow paid Redfin $100 million in 2025 to get Redfin to exit the market for multifamily rental advertising on internet listing services (ILSs) and instead syndicate Zillow’s listings, effectively turning Redfin into a distribution channel rather than a rival.

• According to the complaint, Redfin agreed to terminate its multifamily rental advertising contracts, stop competing for those ads for up to nine years, transition customers to Zillow, and serve as an exclusive syndicator of Zillow’s rental listings.

• The FTC and several states say this “pay‑for‑exit” arrangement is an unlawful agreement and an illegal acquisition under Section 7 of the Clayton Act and Section 5 of the FTC Act, likely leading to higher prices and worse terms for property managers and less innovation and choice for renters.

Zillow and Redfin’s defense

• Zillow and Redfin argued in their motion to dismiss that the partnership is procompetitive because it expands the number of listings available to renters and improves the platforms’ value, and that the FTC mis‑defined the relevant market by focusing only on the advertising side of what they frame as a two‑sided platform (renters and advertisers).

• They also pushed for a more demanding “rule of reason” style analysis instead of the FTC’s “quick look” framing, citing recent Fourth Circuit precedent (Robinson v. NCAA) to argue that a shortcut presumption of harm is inappropriate here.

Why the judge let the case go forward

• On May 7, 2026, a federal judge in the Eastern District of Virginia denied Zillow and Redfin’s bid to dismiss, finding that the FTC and state AGs had plausibly alleged an anticompetitive agreement in which Redfin agreed to stop competing for multifamily rental listings and leads in exchange for the $100 million payment.

• The judge described the listing deal as “clearly” anticompetitive at the pleading stage and concluded that whether the arrangement has offsetting procompetitive benefits is a factual question that must be tested with evidence, not decided on the pleadings.

What happens next

• The case will now move into full litigation: discovery, expert work, and potentially summary judgment and trial, unless it settles.

• The FTC is seeking to unwind or restructure the arrangement, including possible divestitures or reconstructing Redfin’s rental advertising business to restore competition in the multifamily ILS advertising market.