Airbnb Takes a Hit in San Francisco


Almost as quickly as non-traditional online services pop up and thrive, efforts to regulate them seem to appear. Uber has dealt with efforts across the country to treat its service like a traditional cab company. Services like have battled municipalities seeking to hit them with hotel occupancy taxes. And now Airbnb is feeling some heat.

For my readers who don’t get out much, Airbnb is a San Francisco-based company that operates a Web site through which “guests” can connect with “hosts” to enter into agreements to rent accommodations on a short- or long-term basis. Airbnb doesn’t own, manage or operate any of the host properties, and is not a party to the rental agreements. It does not charge an upfront fee for hosts to post a listing on its Web site, and does not run banner ads or other forms of advertising next to the listings. Airbnb makes money by charging hosts and guests a service fee that is a percentage based on the cost of the rental.

Apparently in reaction to Airbnb’s popularity, in 2015, San Francisco repealed an ordinance, in place from 1981 to 2014, that had banned “tourist or transient rentals.” But the 2015 ordinance lifted the ban under certain conditions. One of the main conditions is that a host register a residence with San Francisco before making it available as a short-term rental. Registration requires proof of liability insurance and compliance with municipal codes, usage reporting, tax payments and other conditions.

Apparently, however, San Francisco found it hard to police the ordinance because short-term rentals operate in private residences without any commercial signage posted and because hosting platforms do not disclose addresses or booking information about their hosts. To address that problem, the city adopted an ordinance this year that requires companies like Airbnb to actively monitor and verify content provided by third-party hosts before publication. If the site fails to do so it could be held criminally and civilly liable for publishing a listing for an unregistered unit on its Web site.

Not surprisingly, Airbnb was not thrilled with being stuck with an extra regulatory burden. It challenged the 2016 ordinance, relying primarily on Section 230 of the federal Communications Decency Act. That law provides that the operator of an interactive computer service cannot be deemed the publisher of third party content. Very simply the law means Facebook, for example, isn’t liable for defamation if a user posts something defamatory about another person. The third party content provider is the publisher, but not the online platform.

In Airbnb’s view, the San Francisco ordinance came under the Section 230 umbrella. In its view, the threat of a criminal penalty for providing and receiving a fee for Booking Services for an unregistered unit requires it to actively monitor and police listings by third parties to verify registration. Airbnb argued such a requirement has the effect of treating it as a publisher because it involves the traditional publication functions of “reviewing, editing, and deciding whether to publish or to withdraw from publication third party content.”

The court didn’t see it that way. In its view, the Ordinance “does not threaten the liability [Airbnb] fears.” According to the decision, “[i]t 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. . . . [Airbnb is] perfectly free to publish any listing they get from a host and to collect fees for doing so -- whether the unit is lawfully registered or not -- without threat of prosecution or penalty under the Ordinance. The Ordinance holds [Airbnb] liable only for their own conduct, namely for providing, and collecting a fee for, Booking Services in connection with an unregistered unit. This regulation of plaintiffs’ own conduct “does not depend on who ‘publishes’ any information or who is a ‘speaker.’”

In other words, from the court’s perspective, Airbnb isn’t responsible for what any third party content provider says, it is responsible only for ensuring that, before the content provider uses Airbnb, it is registered with the city. Of course, the only purpose for someone to use Airbnb is to publish the availability of their house for rental. And so the ordinance feels to me like it is shooting the messenger. In this case Airbnb. There’s no word as yet on whether Airbnb will appeal, but I’d be pretty shocked if it didn’t. If San Francisco wins, look for lots of other cities to pass similar legislation. The stakes are high.


Rolling Stone recently got hit with a $3 million libel verdict resulting from its story on an alleged rape at the University of Virginia. This was one of three lawsuits arising from the article (note - - in my experience, this is not a “more the merrier” scenario). The plaintiff in this particular case was Nicole Eramo, a UVA dean who contended that the article falsely portrayed her as a heartless bureaucrat unwilling to assist the alleged victim.

Almost from the moment it was published, the article drew criticism for alleged inaccuracies and sloppy reporting and editing. Rolling Stone itself owned up to the criticism -- publishing an online version of the article on December 5, 2014 with an Editor’s Note apologizing for the discrepancies in the story. Rolling Stone also commissioned a study by the Columbia Journalism Review. That study was unsparing in its criticism of the reporting and editing. So given all the self-flagellation, I wasn’t all that surprised by the verdict. But based on an article in The Hollywood Reporter I am a little surprised how the jury got there.

The plaintiff in this case, Ms. Eramo, was considered a public figure. That was good news for Rolling Stone, because that status required her to prove that Rolling Stone published the article with actual malice -– that is, it knew the article was false or acted recklessly -- meaning it should have known the article wasn’t accurate. And the thing is, the jury found that the original article didn’t satisfy the actual malice standard. Which should have been the best news for Rolling Stone since the invention of rock and roll. But it wasn’t.

The jury decided that the December 5 Editor’s Note, which was accompanied by the original article was a new and separate publication. And that was a problem. When viewed on its own, the December 5 publication essentially said “here’s an article that is so riddled with inaccuracies we’re apologizing for it. But go ahead and read it.” In other words, whatever Rolling Stone’s state of mind was when it published the original story in November of 2014, by December 2014, it apparently knew better – by its own admission. And that admission doomed its chances in the libel suit.

The decision seems a little counter intuitive. It’s never pleasant to get in trouble for trying to do the right thing. And the decision begs the question whether publishers will avoid apologizing or clarifying articles for fear of a similar ruling. That hardly seems like a good result for the readers.

If there is a silver lining for Rolling Stone here, it may be that the jury’s decision finding the Editor’s Note was a new publication may not survive appeal. Had the jury had based its finding solely on the original article, a successful appeal would have been less likely. Stay tuned.

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