Airbnb’s S.F. showdown may set rules

Outcome could determine liability for sharing-economy firms

Airbnb has a message for cities that try to enforce rules that crimp its couchsurfing style: See you in court.

The world’s fourth-most valuable startup is testing a legal strategy against its hometown that may be a template for sharing-economy firms to fend off regulation. Because it operates on the internet, Airbnb argues, it can’t be held responsible if users skirt local laws.

Airbnb sued San Francisco in June after it enacted a measure barring home-sharing platforms from collecting booking fees from hosts who haven’t registered their units with the city. Airbnb also sued beach-front Santa Monica in Southern California and is threatening to sue New York over a state bill await- ing the governor’s signature. Anaheim, home to Disneyland, dropped its effort to regulate Airbnb less than two weeks after it was sued by the company.

Companies arguing they’re merely platforms, not service businesses, isn’t novel. Uber deploys that defense against regulators in battles over everything from paying drivers to determining who’s responsible when passengers get hurt.

Airbnb has added a twist by taking the offensive, asserting that a 20-year-old U.S. law shields it from liability tied to users in the same way EBay isn’t responsible for sales of bootleg recordings or Stubhub for scalped tickets. Airbnb’s online transactions and fees are protected by the Communications De- cency Act of 1996 because they are “part and parcel” of its service, it says.

A federal judge voiced skepticism Thursday about Airbnb’s argument, saying he was struggling to understand why the company thinks it should be given immunity from local regulation as a publisher of someone else’s content.

Congress, in enacting the Communications Decency Act, wasn’t permitting “a lawless no man’s land just because it’s on the internet,” U.S. District Judge James Donato said during a hearing on the company’s request to block San Francisco’s law from taking effect. The hearing ended without a ruling.

While the court battle springs from the city’s overheated housing mar- ket, the stakes are much broader.

Airbnb, with a valuation of $30 billion, has garnered support from competitor Expedia’s HomeAway, as well as a group representing Amazon.com, Facebook and Google. The Internet Association, whose members also include Uber and ride-hailing rival Lyft, says the dispute has wide-ranging implications for free speech on the internet.

San Francisco says the company’s attack on the law is absurd because it isn’t intended to police what rental hosts upload to the website. The ordinance “regulates only conduct — an unlawful commercial transaction, not speech,” the city contends.

It’s a tough call who has the stronger argument, said 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,” he said.

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