New NYC law San Francisco lawsuit highlight global risks for Airbnb
Airbnb, the online lodging service that investors now believe is worth $30 billion, faces a reckoning. In eight years of torrid growth, the company has often clashed with local public officials seeking to minimize the impact of short-term rentals on neighborhoods and urban housing markets. Now, those simmering tensions are starting to boil. New York Governor Andrew Cuomo on Friday signed legislation that Airbnb says could seriously damage its business in New York City, the company's largest U.
S. market; the company immediately filed a lawsuit in federal court seeking to overturn the law. The German capital of Berlin recently passed a law banning most short-term rentals, and Barcelona and Amsterdam are imposing steep fines for listings that violate laws there. Airbnb is also engaged in a pitched battle in its home of San Francisco, where the company has also sued to block a new requirement that it reject booking fees from property owners who have not registered with the city.
The New York and San Francisco legal fights are a crucial test of Airbnb�s business model. The company argues it cannot legally be held responsible for how landlords use its platform. If it is required to enforce local laws on short-term rentals, that could drastically reduce listings - and revenue - in some of its biggest markets. Other cities looking to rein in Airbnb are watching the San Francisco proceedings and looking to the city's law as a potential model, said James Emery, deputy city attorney of San Francisco.
"Throughout the country, people representing cities have called me to ask what's going on with the litigation," he said. Airbnb's legal argument in both the San Francisco and New York cases rely on a how to hack an instagram account 20-year-old statute designed to protect free speech online, known as Section 230 of the Communications Decency Act. In the San Francisco lawsuit, the company asserts that the city "impermissibly treats Airbnb as the publisher or speaker of third-party content" when it is merely a platform for communications between property owners and guests.
Other online marketplaces - such as Amazon (AMZN.O), eBay (EBAY.O), and Craigslist - have cited the same law to shield themselves from liability for any improper transactions among users of their services. In San Francisco , U.S. District Judge James Donato said at an Oct. 6 hearing he wasn't "seeing the link" between free speech protections and San Francisco's short-term rental regulations. Donato is expected to issue a ruling soon. Airbnb has also sued the Southern California city of Anaheim, home to the Disneyland theme park, and the nearby beach city of Santa Monica, over regulations that the company contends are illegal.
'ILLEGAL' BUSINESS MODEL Airbnb takes a cut of the revenue when a room or a home is booked and charges a service fee to guests. The company says it helps communities by enabling middle-class families to make extra money. It also points to agreements with officials in nearly 200 locales around the world, mostly for tax collection and in some cases for broader short-term rental regulation.
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