Airbnbthe online hosting service, which investors say is worth $30 billion, has to deal with accounts.
In eight years of torrid growth, the company has often clashed with local public authorities seeking to minimize the impact of short-term rentals on neighborhoods and urban housing markets. Now those simmering tensions are beginning to boil.
The New York State Legislature has passed regulations that Airbnb says could seriously harm its business in New York, the company’s largest U.S. market; Governor Andrew Cuomo has until October 29 to decide whether it will become law. The German capital of Berlin recently passed a law banning most short-term rentals, and Barcelona and Amsterdam impose stiff fines for listings that break the laws.
Ground zero in Airbnb’s fight against tougher regulations is its San Francisco home, where the company has filed a lawsuit to block a new requirement that it disallow booking fees from owners who don’t comply. registered with the city.
The case is a crucial test of Airbnb’s business model. The company says it cannot be held legally responsible for how owners use its platform. If it’s necessary to enforce local short-term rental laws, it could significantly reduce listings and revenue in some of its biggest markets.
Other cities looking to curb Airbnb are watching the debates and seeing the city’s law as a potential model, said James Emery, assistant city attorney for San Francisco.
“Across the country I’ve had people representing cities call me asking what’s going on with the litigation,” he said.
Airbnb’s legal case hinges on a 20-year-old law designed to protect free speech online, known as Section 230 of the Communications Decency Act. The company claims in its lawsuit that San Francisco “unacceptably treats Airbnb as the publisher or speaker of third-party content” when it is only a platform for communication between owners and guests. .
Other online marketplaces, such as Amazon (AMZN), eBay (EBAY) and Craigslist – cited the same law to protect themselves from liability in the event of an improper transaction between users of their services.
In the San Francisco case, U.S. District Judge James Donato said in a hearing on October 6 he didn’t “see the link” between free speech protections and San Francisco’s short-term rental regulations. Donato is expected to render a decision soon.
Airbnb has also sued the southern California city of Anaheim, home to the Disneyland theme park, and the nearby resort town of Santa Monica, over regulations the company says are illegal.
“Illegal” business model
Airbnb takes a revenue share when a room or house is booked and charges a service fee to guests. The company says it helps communities by enabling middle-class families to earn extra money.
It also points to agreements with officials in nearly 200 locations around the world, primarily for tax collection and, in some cases, for broader regulation of short-term rentals.
Critics counter that, in popular tourist destinations, Airbnb is pulling affordable housing off the market, driving up housing prices and disrupting neighborhoods with influxes of passing visitors.
As regulatory threats loom, Airbnb announced on Wednesday would create an online registration system for owners and automate enforcement of Airbnb’s existing rules in New York and San Francisco, which limit operators to a single listing of an entire residence.
New York Congresswoman Linda Rosenthal, New York City’s Legislative Patron, was unimpressed with Airbnb’s announcement.
” It’s absurd. Maybe half of their listings are illegal” in New York, she said. “It’s an integral part of the business model.”
Current New York State law prohibits most city apartment dwellers from renting their units for less than 30 days if they are not present.
The law recently passed by the state legislature would even ban advertising a rental that violates this existing law, which could help regulators crack down on Airbnb itself in addition to users of its service.
Airbnb said it would sue New York State if the governor enacts the law. The company said it removed nearly 3,000 illegal listings in New York over the past year and reports 44,622 total listings in the city as of September 1.
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Battle in Berlin
In Berlin, Airbnb is fighting a city request for information to help enforce a new law imposing fines of up to $110,000 on people who rent more than 50% of their homes for less than two months, among strictest regulations in the world.
Airbnb is “confident to find a favorable agreement” with the city,” said Peter Huntingford, Airbnb’s head of public affairs for Europe.
But with the city’s willingness to collect data and Airbnb’s intention to refuse, another legal battle looms.
“If Airbnb intends to risk a lawsuit, we are ready to go down this route,” said Martin Pallgen, spokesman for the Berlin Senate.
In Barcelona, Airbnb’s third-largest market in Europe, the city is imposing fines that exceed $65,000 for listings without proper licenses. In April, Amsterdam city officials began scraping data from Airbnb and other short-term rental websites to weed out illegal hosts because Airbnb won’t provide details of violators.
In its Wednesday announcement, Airbnb outlined what the company’s head of global policy and public affairs, Chris Lehane, called a “comprehensive regulatory strategy” aimed at “weeding out bad actors.”
But the new proposals refrained from any commitments to share information or enforce bans on short-term rental operators, which many cities say is crucial for effective regulation.
Growing risks
Critics claim that a large portion of Airbnb listings are offered by commercial operators with multiple properties that essentially run illegal hotels. The company, they claim, has effectively transformed many residential neighborhoods into tourist areas.
In Los Angeles, a study by the pro-Labour Los Angeles Alliance for a New Economy found that property owners with two or more listings generated 44% of all Airbnb revenue in Los Angeles.
Airbnb, in a statement, disputed that finding and called the group’s analysis “misleading.”
In New York, the state’s attorney general found that between 2010 and 2014, more than 300,000 Airbnb bookings violated the law, representing about $304 million in booking revenue, of which about $40 million went to Airbnb.
Public officials must prioritize the rights of full-time residents over property owners and visitors, said Rosenthal, the congresswoman for New York.
“I represent New Yorkers,” she said. “I do not represent tourists, and my responsibility is not to protect their cheap offer at the expense of New Yorkers.”
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