FTC Rebrands Zillow–Redfin Partnership As A "Pay‑to‑Exit" Deal

The Federal Trade Commission (FTC) recently sued Zillow and Redfin, alleging that they agreed not to compete for internet listing services (ILS) advertising for multifamily rental properties. While the companies touted their partnership as a way to expand Zillow's network across Redfin's rental sites and reach a wider audience more efficiently, the FTC alleged the deal amounted to Zillow paying Redfin to end its multifamily rental advertising services business, leaving renters and advertisers with Zillow and CoStar as their only rental ILS options. The Commission voted unanimously to authorize the complaint, which was filed in the Eastern District of Virginia. Five state attorneys general filed a parallel action the next day. The lawsuits are a reminder of the antitrust risks companies must consider when contemplating strategic exits through partnerships with competitors.