The Federal Trade Commission is defending its antitrust case challenging a partnership between Zillow Group Inc. and Redfin Corp., telling a Virginia federal court the pact is a clear agreement between the companies to not compete for rental housing advertisements.

The commission responded Tuesday to a motion seeking to toss the agency's case accusing Zillow of paying Redfin more than $100 million to stop competing for the sale of advertisements to multifamily rental housing owners.

The response said that while Redfin continues to operate an internet listing service for renters, rather than compete against Zillow with unique listings and content, Redfin has decided to operate a "copycat" website that shows only Zillow's listings.

"Plaintiffs' complaints challenge a facially anticompetitive and unlawful agreement between two horizontal competitors — Zillow and Redfin — that prevents Redfin from competing in the market for multifamily rental advertising," Tuesday's response said. "Defendants' scheme will cause significant harm to rental advertising customers and renters."

The commission also filed a notice Tuesday withdrawing its request for stay of the case due to the government shutdown, since an agreement to restore funding has been reached. Zillow and Redfin were opposing the stay.

The FTC is challenging an agreement reached in February 2025 under which Redfin agreed to use Zillow as its exclusive provider of multifamily rental listings and to send any leads for the properties to Zillow in exchange for an upfront payment and fees for each lead.

The agreement saw Redfin exit the market for multifamily rental advertisements by ending its contracts with customers and helping Zillow take over the business. The commission said Redfin also terminated hundreds of employees after striking the deal and then helped Zillow hire the workers it wanted.

The companies have said the pact is pro-competitive and pro-consumer because it helps connect property managers to more potential renters to fill their vacancies.

The motion to dismiss last month attacked the market the commission alleges is being impacted by the agreement, specifically a national market for rental advertising. The motion said property managers compete for customers in local markets, where they have numerous ways of advertising other than listing services, including through targeted internet advertising.

But the response Tuesday said Zillow and Redfin recognize internet listing services as distinct from other forms of rental advertising in their communications with investors and internal reports.

The commission said it has also provided evidence showing the "peculiar characteristics" of listing services, including being designed specifically for rental advertising, with user-friendly features and information that renters value.

Enforcers said a national market is appropriate because many rental advertising customers are sophisticated property managers with larger multifamily rental properties who prefer nationwide contracts that allow for flexible spending across their property portfolios.

"It is plausible, based on the facts alleged, that these advertising customers view competition through a national lens, and that is all that is required at the motion-to-dismiss stage," the response said.

The response also pushed back against contentions that the FTC acknowledged the local nature of real estate listing markets in its 2020 challenge of CoStar's planned $588 million purchase of bankrupt online rental property marketing company RentPath Holdings Inc. Redfin ultimately purchased RentPath for $608 million after the CoStar deal fell apart.

The commission said there is nothing inconsistent about nationwide and regional markets coexisting and argued that antitrust disputes must be considered "on a case-by-case basis."

Zillow and Redfin also argued that enforcers are ignoring the two-sided nature of the market, since listing services connect renters with property managers that advertise on the platforms. The motion said in this type of market, antitrust claims have to allege harm to both sides, citing the U.S. Supreme Court's landmark Amex decision from 2018, while enforcers are only alleging harm to advertisers.

The commission said in its response that Amex only applies to two-sided "transaction platforms," like credit card networks that connect two sets of customers for a simultaneous transaction, not a listing service that helps renters find a property.

"These services help the two find each other, but the [internet listing service] does not facilitate a simultaneous transaction between advertising customers and renters," the response said.

While enforcers dispute the need to show harm on both sides of the market, especially at this stage of the case, the response said they have alleged harm to both renters and advertisers. The advertising customers are allegedly being hurt by a loss of competition for listing services and face more leverage for price increases.

The response said renters are allegedly harmed by the loss of competition as well, since Redfin no longer has the ability and incentive to attract renters from Zillow through investment and innovation.

The motion to dismiss argued that the commission is trying to avoid its obligations to allege harm across a properly identified market by relying on a "quick look" analysis and ignoring the procompetitive effects of the partnership as a whole.

A quick look analysis applies in antitrust cases when the alleged conduct is "inherently suspect," but not obviously illegal, and can be justified through a showing of pro-competitive benefits. It is a less demanding standard than a full rule-of-reason analysis, which requires evidence of the alleged harm at the first step, but more demanding than a per se analysis that assumes conduct is unlawful.

The commission said in its response on Tuesday that courts do not need to resolve the question of what standard applies at this stage in the case, but argued that enforcers have made out a case under either the quick look or rule-of-reason.

Nevertheless, the commission said the agreement between Redfin and Zillow is "inherently suspect" and should be subject to a quick look analysis with any purported benefits considered later on.

"Plaintiffs allege that the anticompetitive harm from the agreements is not offset by any procompetitive benefits, and defendants cannot ignore those allegations in favor of their preferred narrative," the response said.

Zillow and Redfin likened their pact to the requirements for Google to share search and ad data with rivals imposed by a D.C. federal court to remedy the tech giant's monopolization of the search market. But the commission said the rental advertising agreement is different, because it required Redfin to exit the market.

"Such requirements are not commonplace because they are presumptively illegal," the response said.

A representative for the FTC declined to comment Wednesday. Representatives for Zillow and Redfin did not immediately respond to requests for comment.

The FTC is represented by Dennis C. Barghaan Jr. of the U.S. Attorney's Office for the Eastern District of Virginia, Civil Division, and internally by Allyson M. Maltas.

Virginia is represented by Tyler T. Henry of the Virginia Attorney General's Office.

Arizona is represented by Connor B. Nolan of the Arizona Attorney General's Office.

New York is represented by Amy E. McFarlane, Elinor R. Hoffmann, Maria L. Di Lauro and Michael D. Schwartz of the New York Attorney General's Office.

Washington is represented by Amy N. L. Hanson and Tyler W. Arnold of the Washington Attorney General's Office.

Connecticut is represented by Julián Quiñones Reyes and Nicole A. Demers of the Connecticut Attorney General's Office.

Zillow is represented by Brendan J. Coffman, Libby J. Weingarten, Beau W. Buffier and Michael S. Sommer of Wilson Sonsini Goodrich & Rosati PC and D. Bruce Hoffman, Blair W. Matthews, Heather Nyong'o, Matthew Rosenthal, Rathna Ramamurthi and Ryan A. Shores of Cleary Gottlieb Steen & Hamilton LLP.

Redfin is represented by Daniel J. Richardson, Jeffrey T. Scott, Kyle W. Mach and Sharon L. Nelles of Sullivan & Cromwell LLP.

The cases are Federal Trade Commission v. Zillow Group Inc. et al., case number 1:25-cv-01638, and Virginia et al. v. Zillow Group Inc. et al., case number 1:25-cv-01647, in the U.S. District Court for the Eastern District of Virginia.