Zillow and Redfin are coming under fire in a new lawsuit. New York attorney general Letitia James and her counterparts from four other states—Arizona, Connecticut, Washington, and Virginia—brought the original case. On Wednesday, that office, led by New York Attorney General Letitia James, filed a groundbreaking lawsuit. The suit alleges that Airbnb and Expedia’s Vrbo colluded to suppress competition in the online short-term housing rental space.
The complaints result from a joint agreement made back in February 2020 where Zillow and Redfin mutually benefited. This partnership provides Redfin.com users with new access to more rental listings than ever before. On one hand, it creates a large market of potential renters for advertising clients. The attorneys general claim that this structure is a huge impediment to competition. They claim it would increase prices for ad buyers and reduce options available to renters.
In a statement, Attorney General Letitia James underscored the lawsuit’s deterrent effect. Millions of New Yorkers, especially low- to moderate-income, use these online real estate listings to find affordable housing. She said that Zillow’s changes could harm renters trying to find the right apartments.
“Millions of New Yorkers rely on online apartment listings to find an affordable and safe place to live,” – Letitia James
The lawsuit seeks an injunction to prevent Zillow and Redfin from engaging in what is described as an anti-competitive scheme. Finally, the attorneys general argue that Zillow’s partnership immunizes it from challenges to Zillow’s ability to directly compete with Redfin’s advertising-based model. They claim this violates the basic tenets of a free market.
James highlighted her concerns about the negative impacts that would come from the merger between the two companies. In her statement, she claimed that this deal just avoids competition altogether. It protects Zillow from having to compete against Redfin when it comes to attracting customers that advertise multifamily buildings.
In the Redfin spokesperson’s statement, the strong disagreement with the allegations flows from their belief that they have a strong legal position. They showcased the benefit of their unique partnership. It has allowed Redfin.com visitors greater access to rental listings and it has provided advertisers with more opportunities to reach potential renters.
“Our partnership with Zillow has given Redfin.com visitors access to more rental listings and our advertising customers access to more renters. By the end of 2024, it was clear that the existing number of Redfin advertising customers couldn’t justify the cost of maintaining our rentals sales force,” – Redfin spokesperson
To the extent that Zillow did respond, it doubled down on its partnership with NAR being “pro-competitive and pro-consumer.” Additionally, they claim it helps match property owners and managers with serious and qualified renters seeking long-term homes, increasing efficiency for both sides.
Either way, the real estate tech company has been drawing attention to potential unsustainability of its own sale of rentals sales staff. To that end, a federal lawsuit has been filed. Developers and builders By late 2024, Redfin accepted it could no longer afford to operate a rentals realtor sales induce. Under this decision, the impetus was based on number of existing customers.