NEW YORK (AP) — The U.S. Federal Trade Commission is suing Zillow and Redfin, accusing the real estate companies of entering what the regulator says is an illegal deal to suppress competition in online rental advertising.

In a lawsuit filed earlier this week, the FTC alleges that the agreement started in February — when Zillow paid Redfin $100 million.

In exchange for that and other compensation, the commission said, Redfin agreed to end contracts with advertising partners, stop competing ads for multifamily properties for
up to nine years and serve as a syndicator of Zillow listings on its own sites.

Redfin also fired hundreds of employees shortly after the announcement of the plan, the complaint notes, alleging that the company also helped Zillow hire “its pick” of those workers.

“Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market — one that’s critical for renters, property managers and the health of the overall U.S. housing market,” Daniel Guarnera, director of the FTC’s Bureau of Competition, said in a statement this week.

Guarnera added that Zillow and Redfin’s actions were a violation of federal antitrust laws.

The Commission argues that the companies’ “unlawful scheme” may reduce incentives for further competition and could lead to higher prices and fewer choices for multifamily rental advertising customers.

In a statement, a Zillow spokesperson maintained that its “listing syndication with Redfin benefits both renters and property managers” — adding that it had “expanded renters’ access to multifamily listings.”

The Seattle-based company said the agreement was “pro-competitive and pro-consumer.”

A spokesperson for Redfin, which was acquired by Detroit-based mortgage giant Rocket Companies earlier this year, added that the company “strongly disagrees with the FTC’s allegations” and was confident about prevailing in court.

Redfin reiterated the Zillow partnership had given its users access to more rental listings and advertising customers access to more renters — noting that by the end of 2024, the company had determined that its own number of advertising customers “couldn’t justify the cost of maintaining our rentals sales force.”