Airbnb’s Girth A Bulwark For Gigs

Airbnb is standing firm against claims by the city of San Francisco that its online business transactions are unlawful and do not pertain to the Communications Decency Act of 1996. The outcome of the court case, scheduled for October 13, could have broad implications for the gig, home, and ride-sharing industries worldwide.

A battle royale will take place in San Francisco next week that could change the way that gig, online and ride-sharing entities do business, according to Bloomberg. Internet-based sharing economy firms have so far managed to skirt rules that hold users accountable to local regulations.

In June, Airbnb sued its home town, which tried to stop home-sharing platforms from collecting fees from hosts who failed to register with the city of San Francisco. The company has done the same in Santa Monica, Southern California and may take action against New York if a state bill is signed by the governor. Airbnb has already beaten Anaheim in Florida, which dropped efforts to regulate the home-sharing company within two weeks of being sued.

Uber’s defense strategy is similar to that of Airbnb’s whereby the company absolves itself of the actions of local agents claiming that the company is just a facilitating platform. Airbnb is doubling down too citing a decades-old U.S. legal loophole that, for example, protects it from regulatory compliance issues by hosts.

The fees that sharing-economy firms charge online are under attack. San Francisco, for example, considers them unlawful transactions while Airbnb claims that its online fees are part of its service and are protected by the Communications Decency Act of 1996.

Mayors the world over are grappling with how to respond to the boom in home-rental and car-hailing apps, and Airbnb has faced strict regulation on short-term rentals in European countries, which lack laws such as the U.S. Communications Decency Act.

San Francisco has a housing crisis. The median rent for a one-bedroom apartment is over $3,500 a month, but some landlords are evicting tenants for more profitable short-term rentals. Last year, a ban on converting residential units for short-term use was reversed, but hosts were required to register with the city, with a fine of $1,000 a day on rental platforms for those who did not register. Airbnb sued.

Airbnb, for its part, claims that 1,200 San Francisco residents have avoided foreclosure by hosting on its platform. While the court case in San Francisco, scheduled for October 20, is largely a result of the lack of housing in the city, it also has serious implications for free speech on the internet. Airbnb is supported Expedia’s HomeAway and a group representing Amazon, Facebook and Google.

San Francisco claims that it is addressing conduct and unlawful commercial transactions, not speech, whereas the online sharing platforms claim that, because they are online, regulation of their commercial transactions is not applicable.

According to Michael Risch, a professor at Villanova University School of Law in Pennsylvania, “If Airbnb wins, we will likely see more companies making arguments that generally applicable regulation is barred by the Communications Decency Act.”