Understanding the Issue
In February 2025, Zillow paid Redfin $100 million to shut down its internet listing services (ILS) business for multifamily rental properties and stay out of the market for up to nine years. Redfin agreed to end contracts with its advertising customers, help transfer them to Zillow, and transform its rental sites into mirror images of Zillow's listings.
The deal seemed straightforward, but it crossed a line: Zillow wasn't acquiring technology, talent, or market share through legitimate means. It was paying a competitor to stop competing.
By September, the FTC and five states filed complaints alleging the agreement violated antitrust laws. The case moved quickly. Within months, Zillow and Redfin signed a stipulated order that unwound the deal and required Redfin to reenter the market with commitments to invest millions of dollars.
For compliance teams, the question isn't just what happened. It's how two major companies structured an agreement that seemed defensible but failed under antitrust scrutiny.
The Market Context
The ILS market for multifamily rental properties was already concentrated when Zillow and Redfin struck their deal. Zillow operated Zillow Rentals, Trulia, and HotPads. Redfin owned Rent.com and ApartmentGuide.com. Together, they controlled two of the nation's largest rental ILS networks.
The agreement didn't resemble a traditional merger. There was no Hart-Scott-Rodino Act filing, no acquisition of assets in the conventional sense. Zillow paid Redfin to exit, not to acquire. Redfin's sites would continue to operate, but only as conduits for Zillow's listings.
This structure created ambiguity. Was it a legitimate business partnership or an anticompetitive scheme? The FTC's answer was clear: paying a competitor to stop competing violates the Sherman Act, regardless of how you label the transaction.
The deal also included noncompete restrictions lasting up to nine years and required Redfin to share competitively sensitive business information with Zillow. These terms insulated Zillow from competition and further condensed the market.
The FTC's Response
The FTC didn't pursue a lengthy trial. Instead, it negotiated a stipulated order that delivered "better, quicker, more certain results" than litigation, according to Daniel Guarnera, Director of the Bureau of Competition.
The order eliminates the anticompetitive provisions entirely. Redfin can now compete independently, sell advertising services, display its own customers' listings, and stop sharing nonpublic business information with Zillow.
But the order goes beyond voiding the agreement. It requires Redfin to reenter the market within six months with specific commitments:
- Build the technological infrastructure to advertise customers' listings across Redfin's portfolio of rental sites
- Hire a general manager, salespeople, and a fully trained customer support team
- Launch advertising to promote the business
- Make a multiyear commitment to operate the ILS business
- Invest millions of dollars to grow the business
Zillow must facilitate Redfin's reentry. It's required to provide employee information so Redfin can recruit Zillow employees, waive noncompete or anti-poaching provisions, and refrain from interfering with Redfin's recruiting efforts.
For nine months after Redfin relaunches, Zillow must allow ILS customers whose contracts can't be canceled within three months to renegotiate without cost or penalty. Zillow must notify customers of this flexibility and can't prevent them from contracting with Redfin.
The order includes penalties. Redfin faces monetary penalties for failing to meet prescribed timeframes and must provide regular updates to the FTC on compliance. Both companies must notify the Commission before entering any future syndication agreement that restricts either party's ability to compete for ILS customers.
Expected Outcomes
The order, which will remain in place for 10 years, aims to restore competition, driving down costs and spurring innovation for renters and property management companies.
Redfin will relaunch with more listings than before the 2025 agreement because it can continue syndicating Zillow's listings without the previous anticompetitive restraints.
The FTC secured firm commitments on investment levels, hiring, and operational timelines. Redfin can't quietly wind down the business or starve it of resources. The order creates a framework for monitoring and enforcement that makes backsliding costly.
Lessons Learned
Neither company has publicly stated what they'd change, but the compliance failures are instructive. The deal's structure suggests the parties believed they could avoid antitrust scrutiny by framing the transaction as something other than a merger or acquisition.
That's a risky assumption. The FTC and DOJ evaluate agreements based on their competitive effects, not their labels. If you're paying a competitor to exit a market and stop competing, you're creating the same anticompetitive harm as an illegal merger.
The agreement also appears to have lacked meaningful antitrust review before execution. A $100 million payment to eliminate a competitor in a concentrated market should trigger immediate legal review, not just by in-house counsel but by external antitrust specialists who can evaluate the arrangement against Sherman Act and Clayton Act standards.
Actionable Steps for Your Team
Map competitive relationships before structuring deals. If your organization operates in a concentrated market and you're negotiating with a competitor, assume the transaction will receive antitrust scrutiny. Document the competitive landscape, market shares, and potential effects on customers before you finalize terms.
Recognize payments to exit as red flags. Any agreement that pays a competitor to stop competing, exit a market, or refrain from certain business activities raises Sherman Act concerns. These arrangements require rigorous antitrust analysis, regardless of how you structure the transaction or what you call it.
Evaluate noncompete and information-sharing provisions carefully. Restrictions on a competitor's ability to operate independently and requirements to share competitively sensitive information can transform a legitimate business arrangement into an antitrust violation. If your agreement includes these terms, you need external antitrust counsel to review them.
Don't assume novel structures avoid scrutiny. The FTC and DOJ evaluate competitive effects, not transaction labels. Structuring a deal to avoid Hart-Scott-Rodino Act thresholds or merger notification requirements doesn't exempt you from antitrust laws. If the agreement harms competition, regulators will challenge it.
Build antitrust awareness into commercial training. Your business development and partnership teams need to recognize when a proposed deal raises antitrust concerns. They should know to escalate agreements involving competitors, market allocation, customer restrictions, or payments tied to competitive restraints before those deals are finalized.
The Zillow-Redfin case shows that antitrust enforcement doesn't require years of litigation to restore competition. But it also shows that companies can't structure their way around antitrust laws. If you're paying a competitor to stop competing, no amount of creative deal-making will make that legal.
