Airbnb’s Success Confounds Regulators

Alongside many other high profile tech industry battles shaping up around the country, one of the biggest and most well-known revolves around Airbnb, an online service that allows users to rent out their home or certain rooms to travelers as a hotel-type service. The benefits of Airbnb are obvious, according to its proponents – it’s a cheaper, easier, perhaps faster way to access temporary lodging. Going further, Forbes’ Adam Ozimek argues that Airbnb’s success despite getting around safety regulations communicates the idea that those laws may not be necessary. Because Airbnb is so popular and functions well, it is possible that the additional requirements such as fire safety regulations and zoning standards are unnecessarily hindering the market. It’s not the illegal service that’s the problem; it’s the law. State and local officials however have not taken to this argument so keenly, claiming that the service operates illegally in the face of laws meant to regulate the hotel industry.

One of the most high profile spats has been between the ‘sharing economy’ service provider and the Attorney General of New York, who has demanded that Airbnb turn over all customer records over to the state as part of an investigation. Under state law, the way the company operates is thought to be illegal by the AGs office. Airbnb seems to have pulled out a win for the time being in this battle, as according to The New York Times a state judge has ruled that for the time being the company does not need to turn over customer records as part of the AG’s investigation, however this is unlikely to be the last chapter in this ongoing saga between the state and Airbnb.

Airbnb however has also been seeing many high profile successes, as it recently came to an agreement with the city of Portland, Oregon, allowing it to legally operate – the first agreement of its kind. Under the agreement, Airbnb will provide the city with one payment without providing the names and addresses of users out of concerns for privacy. It is possible that Airbnb would provide some information, such as anonymous ID numbers, during a tax division audit which the city carries out on most hotels every three years. The agreement was released Friday July 18 via public records request. A similar agreement is being worked on with the city of San Francisco, California, which has recently seen major opposition to their continued operation in the city, with residents claiming that it is a major force in driving up the cost of renting in the city.

While the issue has been brewing mainly at the municipal level at this point and has largely stayed out of state legislatures, the start of a new biennium in 2015 means a flood of new legislation in most states – undoubtedly some of this will be focused on reining in, taxing and regulating the innovative house-sharing service.