Airbnb in dispute with New York and San Francisco

SAN FRANCISCO — Airbnb has won over and empowered lawmakers around the world to allow it to operate in their communities. But two cities, Airbnb’s hometown of San Francisco, and New York, the service’s biggest U.S. market, weren’t as compliant.

On Monday, Airbnb sued San Francisco over a June 7 unanimous decision by the city’s board of supervisors to fine the company $1,000 a day for each unregistered host on its service. If Airbnb fails to comply, it could face misdemeanor charges.

The lawsuit follows a bipartisan decision by New York lawmakers that this month voted to impose a stiff fine on anyone using Airbnb to rent an entire apartment for less than 30 days, a practice that has been illegal in the state since 2010.

The actions show how Airbnb, despite aggressive lobbying efforts, has been unable to persuade some local lawmakers to play ball. And in the case of New York, the company has shown a surprisingly narrow ear for local politics.

“We’re not afraid of money in New York City,” said Micah Lasher, a state Senate candidate and Airbnb critic who worked for New York Attorney General Eric T. Schneiderman. “There are more competing interests in New York and it’s harder to push people around. It’s harder to disrupt. »

A confrontation in the two cities could push thousands of illegal listings out of Airbnb — a rare speed bump for a company that has shown few signs of slowing down. Airbnb is in talks for a new investment round that would peg the company’s value at around $30 billion, tripling its value in two years.

“Airbnb is in a real bind,” said Bradley Tusk, campaign manager for Michael R. Bloomberg’s 2009 mayoral campaign, which helped start-ups like Uber navigate New York’s political landscape. “He must choose between making their markets considerably less valuable and getting rid of a cloud of regulatory uncertainty.”

Airbnb executives once promoted San Francisco as a city they could work with. After affordable housing advocates expressed concern that the service could deepen the city’s housing crisis, Airbnb agreed to cap short-term rentals for entire homes and demanded that hosts in such listings comply. register with the city. This law, known as the “Airbnb Law” for its corporate friendliness, came into effect in February 2015.

But only 20% of the roughly 7,000 hosts required to register have done so, and Airbnb has not removed violators, according to David Campos, a member of the oversight board and longtime Airbnb opponent. The council hopes the fines will spur Airbnb to help enforce the law it helped create.

“Airbnb is proving that it wants to play by its own rules, that it believes it’s entitled to something no company has, the absolute freedom to operate without accountability or oversight,” Campos said. . “It’s their way or the highway.”

In its lawsuit, Airbnb claims the council violated the Communications Decency Act, a federal law that prohibits the government from holding websites accountable for content posted by their users. Just as a website cannot be held responsible for comments posted in its discussion forums, Airbnb cannot be held responsible for illegal rental listings.

In New York, which has an unusually broad anti-Airbnb coalition of Democrats and Republicans, landlords and renters, affordable housing advocates, real estate developers and labor unions, the fight has been a long time coming.

And it intensified as other tech start-ups reconciled with local power brokers. The state senate voted to legalize fantasy sports, clearing the way for the DraftKings and FanDuel corporations to operate.

New York City is now Airbnb’s largest US market. Hosts in New York generated around $1 billion in revenue last year (Airbnb takes a cut), but 55% of listings in New York were illegal, according to a study commissioned by affordable housing advocates.

In 2013, the company received a subpoena from Mr. Schneiderman to obtain statistics on platform users and their usage. Airbnb initially resisted, but agreed to provide an anonymized version of the data a year later.

During the public tussle with Mr. Schneiderman, Airbnb also tried unsuccessfully to negotiate a behind-the-scenes deal with the city’s attorney general and power brokers, and it made some influential enemies along the way.

The company alienated the powerful Hotel Trades Council, an influential hospitality union, by offering a deal to a service workers’ union that allowed Airbnb hosts to use unionized apartment cleaners, according to two people with knowledge. the offer who spoke conditionally. of anonymity.

Silicon Valley venture capitalist and Airbnb investor Ron Conway made matters worse when, after donating to Bill de Blasio’s mayoral campaign, he flew to New York and told Mr. deBlasio and business leaders to follow San Francisco’s lead or fall behind on innovation and growth, according to people who attended one of the meetings. This message was not well received.

In response, Mr Conway said in an email that New York City “won’t even start a real conversation” about innovation and that the city in the process has become “its own worst enemy”.

Airbnb has since tried to appease the city with millions of dollars in hotel taxes. But tax payments, which are paid by hosts, not Airbnb, would essentially legitimize illegal host rentals, argued Liz Krueger, a New York state senator who has lobbied to remove Airbnb listings. illegal.

Airbnb released more data in December in a bridge-building effort, but lawmakers had to make an appointment to read a physical copy of the information at a location in New York chosen by Airbnb. It was a bit like making an appointment at the library to inspect a rare book.

“People could stay as long as they wanted,” said Chris Lehane, public policy manager at Airbnb. Lawmakers said they thought it was an insult. Mr Lehane said this was a confidentiality measure, although the data is anonymous.

Political leaders, unions, landlords and housing activists have devised a way to deter illegal rentals on Airbnb. Mindful of the Communications Decency Act that Airbnb cites in its San Francisco lawsuit, lawmakers drafted the recently approved bill to fine hosts up to $7,500 if they are caught listing a illegal rental.

“We had to become the enforcers because Airbnb wouldn’t,” said state Deputy Linda B. Rosenthal, architect of the legislation. Mr Lehane counters that the bill is an attack on “the core of Airbnb’s core business”.

The bill has yet to be sent to Governor Andrew M. Cuomo and the timeline for it is unclear. Once he receives it, he has 10 days to veto it or let it become law.

Now New York and Airbnb are at an impasse. Airbnb rejects New York’s housing laws and won’t compromise unless it can help rewrite them. Politicians say they will come to the table after Airbnb removes all illegal listings.

In Airbnb’s defense, Lehane said New York is the only major US city that hasn’t worked with Airbnb to create friendlier laws. And Airbnb may one day establish a working relationship with New York lawmakers and power brokers.

“We weren’t perfect and we learned a lot,” Lehane said.

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