The Federal Trade Commission (FTC) just filed a law suit against Zillow. They allege that the company misused millions of dollars to buy off Redfin to remove the company as a competitor in the online rental listings space. This lawsuit further threatens competition in what is arguably the most concentrated market, advertising. This kind of competition is immensely important to U.S. renters, property managers, and the general health of the U.S. housing market.
Zillow’s alleged actions have alarmed regulators who are maintaining, as they did during the height of the pandemic, that competition in the rental market is vital to ensuring fairness. By financially incentivizing Redfin to cease its competitive activities, Zillow purportedly violated federal antitrust laws designed to protect consumers and promote a competitive marketplace.
Speaking on what the FTC’s director of Bureau of Competition, Daniel Guarnera, called a “crisis”,
“Paying off a competitor to stop competing against you is a violation of federal antitrust laws.” – Daniel Guarnera
The rental listings market is extremely important to renters looking for housing opportunities. For one thing, it vastly increases property managers’ ability to reach potential tenants. The FTC’s lawsuit underscores the harmful impacts of reduced competition in this industry. This scenario would lead to less choice and increased costs for consumers.
The complaint makes clear that Zillow’s actions had real-life negative effects on Redfin. Additionally, these actions had broader consequences for the health of the overall housing market nationwide. A diverse and competitive advertising marketplace improves the services and choices provided to individuals searching for rental units. This dynamic environment creates the foundation for broader economic stability.
In response to the allegations, a Zillow spokesperson issued the following statement. They pointed to the company’s efforts to improve access to rental listings through working with Redfin as an example.
“Our listing syndication with Redfin benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms.” – Zillow spokesperson
The lawsuit by the FTC is the first such action as part of a broader criminal enforcement initiative. They’re looking specifically at the big tech companies, particularly as it impacts real estate. The jungle that is the housing market is always changing. Regulatory agencies are cracking down and getting serious about protecting fair competitive practices and thus protecting fair playing fields for all competitors.