Zillow, Redfin Antitrust Lawsuit: FTC Case, Defense, and Stock Fallout

The Zillow and Redfin antitrust lawsuit is a federal case in which the Federal Trade Commission and five state attorneys general allege that a $100 million agreement between the two companies was an illegal scheme to eliminate Redfin as a competitor in online multifamily rental advertising. A federal judge denied the companies’ motion to dismiss in May 2026, and a bench trial is scheduled to begin August 24, 2026, in the Eastern District of Virginia.¹

What the $100 Million Deal Required

On February 6, 2025, Zillow and Redfin signed a partnership agreement and a content license agreement. Zillow paid Redfin $100 million upfront and guaranteed at least $75 million in the first year from leads generated through syndicated listings.²

In exchange, Redfin agreed to stop selling advertising to managers of buildings with 25 or more units, terminate its existing advertising contracts with those customers, and hand the accounts to Zillow.³ The contract cancellations were required whether or not those customers signed with Zillow.² Redfin also became the exclusive syndicator of Zillow’s rental listings, displaying only Zillow’s multifamily inventory rather than sourcing its own. The arrangement barred Redfin from competing in multifamily rental advertising for up to nine years and from displaying any third-party multifamily listings for up to ten years.

Redfin was also required to share competitively sensitive business information with Zillow and to help Zillow hire from the workforce Redfin was cutting.⁴ Within hours of the February 11, 2025 announcement, Redfin said it would lay off 450 employees from its rental division between February and July 2025, and estimated restructuring costs of $18 million to $21 million.⁵

Why the FTC and States Say the Deal Is Illegal

The FTC filed its complaint on September 30, 2025, in the U.S. District Court for the Eastern District of Virginia (case number 1:25-cv-01638), on a 3-0 Commission vote.⁶³ The agency called the arrangement a “pay-to-exit” deal, arguing Zillow purchased Redfin’s competitive position rather than winning customers through better products or lower prices.

The complaint described the internet listing services market for multifamily rentals as “highly concentrated.” By 2024, Zillow, Redfin, and CoStar (which operates Apartments.com) collectively captured more than 85 percent of nationwide ILS revenue.⁴ With Redfin sidelined, regulators said, the market would effectively become a duopoly between Zillow and CoStar, insulating Zillow from “head-to-head competition on the merits.”³

The alleged harms fall into three buckets: higher prices and worse contract terms for property managers who buy advertising, weaker incentives for both companies to invest in attracting renters and improving search tools, and the elimination of hundreds of jobs as Redfin dismantled its rental sales operation.³ The FTC brought claims under Section 1 of the Sherman Act (illegal restraint of trade), Section 7 of the Clayton Act (unlawful acquisition of assets), and Section 5 of the FTC Act (unfair methods of competition).²

On October 1, 2025, a bipartisan coalition of attorneys general from Arizona, Connecticut, New York, Virginia, and Washington filed a parallel lawsuit with similar allegations.⁷ New York Attorney General Letitia James called the deal an “illegal scheme to stop competing.”⁸ Judge Anthony Trenga consolidated the state case with the FTC’s action in November 2025.⁹

Neither the FTC nor the states are seeking monetary damages. Both ask the court to permanently block the agreement and to consider ordering divestiture of assets or reconstruction of businesses to restore competition.¹⁰⁸

How Zillow and Redfin Are Defending the Deal

Zillow has called the partnership “pro-competitive and pro-consumer,” saying it put “tens of thousands of new apartment listings onto Redfin’s websites, giving renters significantly more options — including lower-cost apartments.”¹¹ Redfin has said its advertising customer base had declined to the point where the partnership was a financial necessity, not a scheme to exit the market.¹² Company attorneys added that Redfin was “buckling under more than $800 million in debt with no realistic path to becoming a meaningful competitor.”

In a January 2026 motion to dismiss, the companies raised three main legal arguments. First, they said the rental listing market is a “two-sided platform” serving both renters and property managers, and that under the Supreme Court’s 2018 decision in Ohio v. American Express, the FTC had to show harm to the market as a whole, not just the advertiser side. Second, they argued that the FTC defined the market too broadly as nationwide and failed to adequately allege market power. Third, they pointed to a 2024 syndication agreement between Zillow and Realtor.com that the FTC never challenged, calling the Redfin deal a version of the same arrangement.¹³

Zillow has also acknowledged that it did not report the agreement to the government as required under the Hart-Scott-Rodino Antitrust Improvements Act, which mandates pre-notification of certain large transactions.¹¹

Where the Case Stands Now

Judge Trenga denied the motion to dismiss on May 6, 2026, a significant setback for the companies. The judge found that “the face of the Complaint” demonstrated “clearly anti-competitive conduct” and agreed that a “quick-look analysis” was appropriate, meaning “an observer with even a rudimentary understanding of economics could conclude” the arrangement would harm competition.¹⁴ That framework lowers the FTC’s burden at trial to showing “some form of market injury” rather than a full market analysis.

The court rejected the defense’s central arguments. On the two-sided market theory, the judge expressed skepticism that American Express even applied, noting the government’s position that the ruling governs only two-sided “transactional” platforms, but stopped short of formally resolving the question. Challenges to market definition and market power were called “too fact-intensive” to decide at the dismissal stage. The court concluded that the complaints sufficiently alleged violations of the Sherman Act, the Clayton Act, and the FTC Act.¹⁴ Zillow filed a formal 23-page response on May 20, 2026, continuing to deny the allegations.¹¹

The remaining schedule is tight. A summary judgment hearing is set for July 8, 2026, pre-trial briefs are due August 19, and a bench trial begins August 24, 2026, before Judge Trenga in Alexandria.¹ Because this is a bench trial, the judge rather than a jury will decide the outcome.

Stock Fallout and a Separate Securities Fraud Suit

The antitrust case has hit Zillow’s stock. Shares fell roughly 4.3 to 4.6 percent after the FTC filing, closing at $73.48 the next day.¹⁵ A larger drop came on February 10, 2026, after Zillow’s CFO projected a 200-basis-point hit to first-quarter EBITDA margins from rising legal expenses. Class C shares fell 16.54 percent and Class A shares fell 17.13 percent that day. A smaller decline followed the May 7, 2026 news that the motion to dismiss had been denied.¹⁶

Those losses prompted a separate securities fraud class action, Breidert v. Zillow Group, Inc., et al. (Case No. 26-cv-02016), filed in the U.S. District Court for the Western District of Washington. The complaint alleges that Zillow and certain executives violated Sections 10(b) and 20(a) of the Securities Exchange Act by presenting the Redfin arrangement as a routine partnership while failing to disclose the heightened risk of federal antitrust action. The class period runs from February 11, 2025 through May 7, 2026, and the deadline for investors to seek lead plaintiff status is August 10, 2026.¹⁶

1
PACER Monitor. Federal Trade Commission v. Zillow Group, Inc. et al.
2
American Action Forum. FTC Challenges Zillow’s Pay-to-Exit Agreement in Merger With Redfin
3
Federal Trade Commission. FTC Sues Zillow, Redfin Over Illegal Agreement to Suppress Rental Advertising Competition
4
JURIST. US Federal Trade Commission Files Antitrust Lawsuit Against Zillow and Redfin
5
GeekWire. Redfin to Lay Off 450 Employees After Inking New Rentals Partnership With Zillow Group
6
Federal Trade Commission. FTC v. Zillow Group, Inc. et al., Complaint
7
CNBC. State AGs Sue Zillow, Redfin for Alleged Antitrust Violation
8
New York Attorney General. Attorney General James Sues Zillow and Redfin for Illegal Scheme to Stop Competing
9
Multifamily Dive. Zillow, Redfin Antitrust Lawsuit: Judge Rejects Dismissal
10
Real Estate News. FTC Sues Zillow and Redfin Over Rentals Deal
11
Real Estate News. Zillow Responds to FTC Claims as Antitrust Case Moves Forward
12
CNN. FTC: Zillow Paid Redfin to Stop Competing in Rental Listings
13
Applied Antitrust. Zillow and Redfin Motion to Dismiss Memorandum
14
Axinn Veltrop & Harkrider. From Listings to Litigation: Zillow and Redfin Face Continued Litigation
15
Morningstar. Deadline Approaching: Zillow Group, Inc. Shareholders Urged to Contact Law Offices
16
PR Newswire. Zillow Sued for Securities Fraud After FTC Lawsuit Leads to 17% Stock Drop