Attorneys general from five U.S. states are taking legal action against online real estate giants Zillow and Redfin, accusing the companies of cutting a secret deal to eliminate competition in the rental housing market. The lawsuit, filed Wednesday, claims Zillow paid Redfin $100 million in exchange for shutting down its apartment rental advertising business and steering its clients to Zillow.
The move, according to the suit, was not just a business partnership—it was a coordinated strategy to dominate the rental listings market and reduce consumer choice. Filed by officials in New York, Arizona, Connecticut, Washington, and Virginia, the suit follows closely on the heels of a similar complaint filed by the Federal Trade Commission (FTC) just a day earlier.
According to New York Attorney General Letitia James, the February agreement between Zillow and Redfin was designed to suppress healthy competition and allow Zillow to corner the multifamily rental advertising market without going head-to-head with Redfin.
“This agreement is nothing more than an end run around competition that insulates Zillow from head-to-head competition on the merits with Redfin for customers advertising multifamily buildings,” the lawsuit states.
James emphasized the potential harm to everyday renters, particularly in states like New York, where online apartment listings are a vital tool in finding safe and affordable housing. “Zillow’s attempt to shut down its competition could drive up costs for advertisers and leave renters with fewer options when searching for a new apartment,” she said in a statement.
The legal complaint goes beyond antitrust concerns. It also highlights that Redfin reportedly laid off hundreds of employees before entering the agreement and then re-hired some of them as part of its new arrangement with Zillow. This move, according to the suit, was another part of the effort to consolidate power and reduce competitive pressure.
Zillow, Redfin, and CoStar—the parent company of Apartments.com—currently dominate the online rental marketplace. Together, they account for approximately 85% of the industry’s revenue, making any cooperation between two of the biggest players a serious concern for regulators.
In response to the lawsuit, Redfin issued a statement strongly denying the allegations. “Our partnership with Zillow has given Redfin.com visitors access to more rental listings and our advertising customers access to more renters,” a company spokesperson said. They explained that Redfin’s rental advertising business had become financially unsustainable by the end of 2024. “Partnering with Zillow cut those costs and enabled us to invest more in rental-search innovations on Redfin.com, directly benefiting apartment seekers.”
Zillow also pushed back against the accusations, defending the partnership as a positive step for both property managers and renters. A company spokesperson said, “Our partnership with Redfin is pro-competitive and pro-consumer by connecting property managers to more high-intent renters so they can fill their vacancies and more renters can get home.”
Despite those defenses, the lawsuit from the five states joins a growing list of regulatory actions aimed at Big Tech and online platforms, as governments step up efforts to prevent monopolistic practices.
In addition to seeking financial penalties and court oversight, the attorneys general are calling for an injunction to block the existing agreement between Zillow and Redfin. The lawsuit also hints at the possibility of business restructuring to restore a competitive balance in the marketplace.
Shares of both companies dropped following the announcement. Zillow and Redfin had already seen losses after the FTC filed its complaint on Tuesday, and the state-level lawsuit only added to investor concerns.
The FTC’s case alleges a similar conspiracy between the two firms, arguing that their agreement violates federal antitrust law and hurts both advertisers and renters. Like the state attorneys general, the FTC is calling for the deal to be dismantled.
Both Zillow and Redfin have rejected the claims made by the FTC as well, reaffirming their belief in the partnership and its benefits for users.
This lawsuit highlights the increasing scrutiny on dominant players in the digital real estate space. As housing affordability becomes a growing concern across the U.S., state and federal officials appear determined to ensure that powerful platforms don’t further tighten their grip on the limited options available to renters.
Whether these legal challenges will force changes in how Zillow and Redfin operate remains to be seen. But one thing is clear: the fight over who controls your apartment search is just heating up.
