State attorneys general, led by New York's Letitia James, have brought legal action against online real estate giants Zillow and Redfin. The companies are accused of entering into non-compete agreements that could potentially hurt both renters and advertisers in the apartment rental industry. As reported by the Office of the Attorney General, the crux of the issue is an alleged $100 million deal in which Zillow purportedly paid Redfin to exit the multifamily rental advertising space and migrate their customers over to Zillow's platform.
"Millions of New Yorkers rely on online apartment listings to find an affordable and safe place to live," Attorney General James stated, pinpointing the importance of a competitive market in sustaining fair prices and choices for consumers. The legal complaint, which cites the agreement as a violation of federal antitrust laws, was joined by other states, including Arizona, Connecticut, Washington, and Virginia. The deal, made in early 2025, is seen as a move that could not only inflate costs for advertisers but also trim down options for renters seeking accommodation in a market where already, only three companies dominate a staggering 85 percent of market revenue, as per the Attorney General's Office.
The partnership between Zillow and Redfin has effectively ceased competition in an already concentrated market. Under the terms of one of two agreements forged on February 6, which includes a Partnership Agreement and a Content License Agreement, Redfin agreed to take a back seat in the multifamily advertising market for up to nine years, agreeing to display listings on its network that also appear on Zillow’s sites. Such an arrangement, officials argue, stymies innovation and user experience improvement efforts, as it minimizes the impetus for Redfin to draw new customers or to enhance its service for renters.
The lawsuit represents a collective concern that such a collusion undermines incentives for competitive practices, which often lead to better services and pricing for consumers. Furthermore, with Redfin's decision to lay off roughly 450 employees linked to its multifamily rental advertising business, it signifies a profound shift in the company's operations. Authorities are looking to obtain a court ruling declaring the Zillow-Redfin agreements as unlawful and are pushing for an injunction that could prevent such conduct and rejuvenate competition in the sector. Measures proposed in the suit include possible divestitures, or business reconstructions, to restore the competitive landscape.
According to the Attorney General's Office, this legal endeavor is being overseen by a team within the New York Attorney General’s Antitrust Bureau, including Assistant Attorney General Luisa Di Lauro, Michael Schwartz, Deputy Bureau Chief Amy McFarlane, and Bureau Chief Elinor Hoffmann, and is under the jurisdiction of the Economic Justice Division. "New Yorkers are already struggling with an unaffordable housing market," James said, "and I will fight to stop this illegal deal that could make it even harder to find a home."
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