The details laid out in a recent complaint filed by the Federal Trade Commission (FTC) against internet listing services (ILS) Zillow and Redfin may conjure a sense of déjà vu for antitrust watchers: a nine-figure payment, a rival’s quiet retreat, and a contract that calls itself a “partnership” while disclaiming the name. Strip away the wordplay and what remains looks like an old-fashioned market allocation—the sort of pay-to-exit pact that the U.S. Supreme Court flagged in Palmer v. BRG.
But the complaint does more than reanimate a classic restraint. The commission also casts the deal as a merger in disguise and, under Section 5 of the FTC Act, an “unfair method of competition.”
According to the complaint, the long history of Zillow and Redfin’s competition in the advertising market for rental homes and apartments was brought to an end in February with Zillow’s $100 million payment to Redfin to exit the market. The deal, the FTC contends, called for Redfin “to stop selling multifamily advertising, to terminate its existing multifamily advertising contracts, and to transition those customers to Zillow.”
The contracts attached to the complaint almost tell the story themselves. One dresses up the arrangement as a “partnership,” but hastens in the fine print to say that it isn’t one (Section 9.6). Another (the “Content License Agreement”) gives Zillow the exclusive right to distribute Redfin’s rental listings. Read together, they resemble a script for market allocation: a large payment and a rival stepping aside.
Antitrust doesn’t care about labels. Whether a particular arrangement is called a partnership, syndication, or alliance, it’s the substance that matters. The deal in this case can be read three ways: as a horizontal restraint (a pay-to-exit pact under Section 1 of the Sherman Act); a merger in disguise (an acquisition that lessens competition under Section 7 of the Clayton Act); or an unfair method of competition under Section 5 of the FTC Act. Whatever the label, the outcome is the same—fewer competitors in an already-concentrated market.
From Three to Two: Understanding the ILS Market
Rentals are the silent giant of the U.S. housing market, where nearly 49 million households rent. For large landlords, visibility depends heavily on ILS advertising, with a Redfin survey finding that 88% of property managers include ILS advertising in their budgets, and that it comprises more than half their marketing spend. What began as a patchwork of local classified ads has consolidated into three national ILS players: Zillow, CoStar (through Apartments.com), and Redfin (through RentPath’s Rent.com and ApartmentGuide.com). By 2024, these firms had captured more than 85% of national ILS revenue; Zillow alone claimed more than half of all U.S. rental listings.
External data paint much the same picture in terms of reach. Zillow, citing Comscore, reported about 27 million monthly unique visitors and 1.8 million active rental listings on its network in the first quarter of 2024. CoStar, by contrast, touts hundreds of millions of monthly visits across its Homes.com and Apartments.com networks. While these figures do not reflect revenue shares, they are useful proxies for scale and advertiser exposure. Moreover, they underscore the network effects that make it difficult for smaller entrants to break into the market.
Against that backdrop, the Zillow/Redfin arrangement becomes easier to decode. On Feb. 6, 2025, the companies signed two contracts that effectively transformed Redfin from a competitor to a conduit. Under the $100 million partnership agreement, Redfin agreed to terminate contracts with property managers, to introduce those customers to Zillow sales reps, to hand over competitively sensitive information, and even to help Zillow hire Redfin’s own displaced rental salesforce.
The firm’s content license agreement then closed the circle. For up to nine years, Redfin’s Rent.com, ApartmentGuide.com, and related sites would display only Zillow’s listings for properties of 25 units or more. Redfin would stop competing for those advertisers altogether, while still collecting syndication fees from Zillow. The Redfin rentals network, once pitched as a growth engine, would become a paid outlet for its former rival’s content.
The agreements also reached inside Redfin’s workforce. The partnership agreement required Redfin to terminate much of its rental salesforce (roughly 450 employees) and to facilitate Zillow’s hiring of those it wanted. Zillow was free to make offers to Redfin’s sales reps and contractors, and Redfin promised not to enforce noncompetes or nonsolicitation agreements against any employee who crossed over. In other words, this was not just a transfer of contracts and customers, but of the people and know-how that had sustained Redfin’s competitive push.
The FTC’s Theory of Harm
For the commission, the narrative is simple: a three-player national rivalry collapsed into two. Redfin, which had just turned its rentals segment profitable, sold its way out of the business. In the 25-plus-unit segment, the complaint says, Redfin has not merely scaled back but exited entirely. Its contracts were terminated, its customers transferred, and its listings replaced by Zillow’s.
The FTC calls this what it is—the elimination of a competitor. Advertisers will face higher prices and less choice. The ripple effects reach smaller landlords too, since dismantling Redfin’s rental operation weakens its ability to serve those customers. Property managers face fewer bargaining options, higher prices, and less innovation in advertising tools. Renters lose out from reduced incentives to improve the search and user experience. The distinctive add-on tools Redfin had begun to offer, like its RentRep social-media service, have already been discontinued.
The FTC frames the relevant market in this case nationally and by product. Within ILS advertising, it identifies the narrower submarket for large multifamily properties—25 units or more—where advertising decisions are centralized and portfolio-wide. Redfin’s complete withdrawal from that segment, combined with the layoffs and data transfers, effectively eliminated it as an independent rival.
Both the broad ILS market and the multifamily submarket were already “highly concentrated,” the FTC says, with Herfindahl–Hirschman Index scores (HHIs) well above 2,500 and increases from Redfin’s withdrawal exceeding 200 points. Although the agency withholds the underlying data, it regards the structure of the deal—a $100 million payment to exit and a decade-long exclusivity clause—as presumptively illegal.
Restraint, Merger, or Something Else?
Legally, the complaint takes a belt-and-suspenders approach, pleading violations of Section 1 of the Sherman Act, Section 7 of the Clayton Act, and Section 5 of the FTC Act. That the FTC has chosen to plead this case under three different statutes at once speaks volumes. The commission wants the court to see the Zillow/Redfin agreements as whichever kind of antitrust violation proves most persuasive.
Are these contracts a restraint of trade, a merger in disguise, or simply an “unfair method of competition”? The answer matters most for how the law should treat deals that blur the line between collaboration and consolidation.
Pay-to-Exit: From Palmer to Pay-for-Delay
As a restraint, the deal looks instantly familiar. In 1990’s Palmer v. BRG, the U.S. Supreme Court condemned a bar-review company’s payment to induce its only rival to withdraw from Georgia. It was a “classic” market allocation. In 2013’s FTC v. Actavis decision, that suspicion was carried into the world of pharmaceuticals: so-called pay-for-delay settlements—in which brand-name drugmakers paid generics to stay out of the market—could not escape scrutiny simply because they were wrapped in settlement agreements. And the 2nd U.S. Circuit Court of Appeals’ 2015 decision in Apple e-Books reminded us that hub-and-spoke coordination, even when dressed up as a series of vertical contracts, remains collusion when its practical effect is to suppress rivalry.
Zillow’s $100 million payment fits that lineage. The FTC could have treated it as per se illegal but instead chooses to apply the rule of reason, acknowledging Actavis’ balancing framework. The suspicion remains: when money changes hands to remove a rival, efficiencies seldom justify it.
Not Quite a Merger, But Close Enough
Alternatively, the arrangement functions as an acquisition. Redfin sold its customers, contracts, staff, expertise, data, and the right to solicit advertisers—the competitive assets of a business. Section 7 covers asset acquisitions, as well as share mergers. Brown Shoe emphasized probable effects over form, and regulators have long treated subscriber lists, provider networks, or distribution rights as merger assets. Under that standard, the transfer of Redfin’s multifamily advertising operation qualifies as a merger in substance, if not in form.
Read another way, the complaint looks like a merger case in all but form. Redfin may not have sold its equity, but it sold its business. Section 7 has long applied to asset acquisitions, not just corporate mergers. Brown Shoe taught that the incipiency standard is about probable effects, not formalities. Columbia Pictures recognized that distribution rights could count as assets.
Beyond Sherman and Clayton: The FTC’s Wildcard
Section 5 of the FTC Act remains the agency’s broadest but least tested weapon. With its 2022 policy statement, the FTC signaled that Section 5 reaches “coercive, exploitative, collusive, abusive, or deceptive” conduct even outside traditional antitrust limits. The Zillow/Redfin case lets the commission test that claim. Courts have been cautious, but Section 5 operates here as a backstop: even if judges hesitate to call the deal a restraint or merger, it may still be condemned as an “unfair method of competition.”
The Efficiency Defense Across All Three
Zillow and Redfin defend the deal as efficient (see the companies’ joint press release announcing the “partnership”): it “makes apartment hunting easier”; offers a “single advertising solution”; and lets each company “focus on its core business.” The FTC views these claims as rhetorical. Under Actavis, efficiencies that result from eliminating rivalry are not cognizable. “More exposure” is not a justification for paying a competitor to vanish; “cost savings” achieved by dismantling a rival are the harm itself.
Even under a generous rule-of-reason lens, none of the claimed efficiencies would likely survive scrutiny. Redfin could have syndicated listings without terminating its workforce or contracts. Greater reach can be achieved through competition, rather than consolidation. Convenience for advertisers is not consumer welfare, and cost-cutting by merger is not efficiency, but concentration. As in Actavis and the EU’s Lundbeck case, efficiencies that buy peace rather than productivity are illusory.
Remedies Sought: Restoring the Rivalry
The FTC seeks not only to enjoin the agreements but to rebuild the competition they erased. Its prayer for “structural relief” aims to restore Redfin’s independence—perhaps through divestiture of customers, data, or staff. Put simply: if the court believes Redfin has been hollowed out, it should order steps to put flesh back on the bones. That could mean forcing Zillow to unwind the transfer of customers or data, or even obliging Redfin to reconstitute its rental-advertising operation.
Such remedies are rare in Section 1 cases but familiar in merger control, reflecting the hybrid nature of this action. Section 5’s equitable reach gives the agency leeway to request structural measures even in a conduct case.
Parallel actions by state attorneys general from New York, Arizona, Connecticut, Washington, and Virginia echo the FTC’s complaint, reinforcing the view that the deal’s problems are not a matter of regulatory style, but consensus. The states likewise seek injunctions and, if necessary, restructuring to restore rivalry.
Across the Atlantic: Converging Functionalism
The FTC’s multi-pronged theory mirrors developments in Europe and the UK, where competition authorities routinely treat similar arrangements under both conduct and merger rules. Under Article 101 TFEU (and the UK’s Chapter I prohibition), “pay-for-stay-out” or “market-sharing” agreements are condemned as restrictions by object, much as Palmer would have it. The EU’s pharmaceutical pay-for-delay cases (Lundbeck, Servier) frame large payments to withdraw from the market as collusion, regardless of the contract label.
At the same time, EU and UK authorities have not hesitated to treat the transfer of assets or staff as mergers when they effectively remove a rival. The UK Competition and Markets Authority’s Facebook/Giphy decision is a striking example: what looked like a small content deal was treated as a merger because it eliminated a potential rival in display advertising. The same instinct appeared earlier in Telefónica/Portugal Telecom, where a noncompete clause accompanying a failed merger was condemned under Article 101 TFEU as a market-sharing pact.
Conclusion
The FTC’s Zillow/Redfin case shows that modern antitrust doctrine has more than one box for the same conduct. The same contracts can operate as both restraint and acquisition. Section 1, with its Palmer and Actavis precedents, targets pay-to-exit arrangements. Section 7 frames the deal as consolidation by stealth—an acquisition of a rival’s assets without Hart-Scott-Rodino review. Section 5 stands behind them as a principle, insisting that labels do not matter when the substance is elimination of a competitor.
What is most striking is not the doctrinal novelty but the candor with which the FTC pleads all three theories. The commission seems less interested in taxonomy than in consequences: one fewer independent rival in a concentrated digital market.
If courts endorse that view, Zillow/Redfin could become a landmark for hybrid cases that blur the boundaries between coordination and consolidation. The remedies will decide the case’s legacy: an injunction would halt the contracts; structural relief could attempt to rebuild Redfin’s independence.
The agency’s message is simple—antitrust isn’t fooled by clever drafting. Whether you call it a partnership or a merger, the effect is the same: rivalry replaced by redundancy.
