The Federal Trade Commission is seeking to unwind key parts of a rental-listing agreement between Zillow Group Inc. (NASDAQ:Z) and Redfin Corp. and require Redfin to reenter the market.
The FTC said Monday it will file a stipulated order resolving its litigation against the companies and restoring competition in online platforms used by renters and property managers. The agency said the 2025 agreement involved Zillow paying Redfin $100 million to shut down its internet listing services business, transfer advertising customers to Zillow and stay out of the market for up to nine years.
Redfin Must Return To Rentals
The proposed order, which would remain in place for 10 years, requires Redfin to restart its internet listing services rental advertising business within six months after the order is finalized.
Redfin would also have to build the technology needed to display customer listings across its rental sites, hire a general manager, sales staff and a customer-support team, and invest millions of dollars in growing the business.
The order also removes restrictions on Redfin’s ability to sell advertising services and display its own customers’ listings. Zillow would have to facilitate the recruitment of certain employees by Redfin and allow some customers to renegotiate contracts without penalties after Redfin relaunches its business.
"Today’s settlement unwinds an agreement under which Zillow paid Redfin $100 million to stop competing and hand off all its customers to Zillow," Daniel Guarnera, director of the FTC’s Bureau of Competition, said.
FTC Challenges 2025 Agreement
The FTC alleged that the companies’ February 2025 agreement dismantled Redfin as a competitor in multifamily rental advertising. At the time, Zillow and Redfin operated major rental listing services including Zillow Rentals, Trulia, HotPads, Rent.com and ApartmentGuide.com.
The agency said the agreement allowed Zillow to avoid competing directly with Redfin and further concentrated an already concentrated market.
The FTC and the states of Arizona, Connecticut, New York, Virginia and Washington filed the proposed order. The FTC approved the stipulated order in a 2-0 vote and filed it in the U.S. District Court for the Eastern District of Virginia. It will become binding once entered by the court.
Zillow’s second-quarter revenue rose 18% year over year to $772 million, while Rentals revenue increased 31%. The company also issued third-quarter and full-year revenue guidance below analyst estimates.
Price Action
Zillow shares were up 3.26% at $37.05 at Monday’s close. In after-hours trading, shares were down 0.14% at $37.00.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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