Airbnb Loses Battle Over New San Francisco Law

In a major blow to Airbnb, the online home rental service lost a major battle over a new San Francisco law.

A federal judge has refused to block a measure that makes it a crime for companies like Airbnb to collect booking fees for units that haven't been registered with the city.

Airbnb argued that the ordinance would require the company to police the listings on its site -- a requirement that Airbnb says violates the federal Communications Decency Act. That law, dating to 1996, broadly protects Web platforms from responsibility for users' activity.

U.S. District Court Judge Donato rejected Airbnb's argument. He wrote in an 18-page decision issued Tuesday that the San Francisco law doesn't require Airbnb to turn down ads or otherwise police content created by users. Instead, he ruled, the law only requires Airbnb to turn down booking fees.

"It does not regulate what can or cannot be said or posted in the listings. It creates no obligation on plaintiffs’ part to monitor, edit, withdraw or block the content supplied by hosts," Donato wrote. "The ordinance holds plaintiffs liable only for their own conduct, namely for providing, and collecting a fee for, booking services in connection with an unregistered unit."

Donato went on to suggest that Airbnb potentially could comply with the law by changing its business model and charging users for ads, instead of collecting a fee for bookings. (He also indicated that he may still block the law -- at least temporarily -- if he determines that San Francisco doesn't have a "functional verification system." He plans to hold another hearing at a future date to address that narrow issue.)

If Donato's decision on the broader question stands, the ruling could affect a broad swath of Web companies that allow users to post ads. Silicon Valley recognized the implications of the San Francisco law months ago; the trade groups Internet Association -- which counts Amazon, Google and Facebook as members -- and CALinnovates tried to file a friend-of-the-court brief siding with Airbnb. Donato refused to allow the groups to weigh in, stating that their arguments didn't add any "unique" information or perspective.

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