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WSJ: New York Tries to Kill Airbnb

Uber and other companies in the sharing economy have had to spend millions fighting city and state regulators that try to stifle innovative services. Now New York has moved to crush the home-sharing service Airbnb in the city’s five boroughs.

Governor Andrew Cuomo late Friday signed legislation that would impose a fine of up to $7,500 on anyone who advertises a short-term rental apartment on a home-sharing site. That’s more than the penalty for drunk driving.

This cuts the core of Airbnb’s business, which allows a family or young professional to earn cash by renting out a room or apartment while traveling away from home. The typical New York host earns more than $5,000 a year, and that’s a nice fillip in a city with a high cost of living.

The platform is popular with the thousands of visitors and tourists who visit the Big Apple each week. Many prefer not to pay $300 a night for a Holiday Inn Express,assuming they can even find a hotel room. The service fills a market need, and buyer and seller are better off, so naturally politicians want to mess with all this happiness and business efficiency.

The politicians are responding to hoteliers and unions that claim that mini-Donald Trumps are buying up properties and renting them as “illegal hotels.” This doesn’t check out: More than 95% of New York Airbnb hosts sharing their entire home post only one property, and the company last year yanked roughly 3,000 illegal listings out of some 44,000 in New York. The hotel industry also riled up some affordable housing groups to say that Airbnb is driving up the cost of rent. One irony is that more than three-quarters of hosts say that sharing their space helps them pay rent.

The real complaint is that Airbnb is unwelcome competition, and here’s how you know: The company already offered Empire State regulators everything they claimed to want. Airbnb said it would ban New York hosts from renting more than one property; require online registration for hosts; ban users who break policies three times; and collect state taxes so that hosts couldn’t cheat. That’s right: Airbnb wanted to help New York dig up more revenue.

Airbnb has already sued to block the new law, and New York may need a good lawyer: Federal law pre-empts holding platforms like Airbnb responsible for the content of its advertising, and there’s also the detail that the First Amendment protects commercial speech. As Airbnb general counsel Rob Chesnut put it in a letter to Gov. Cuomo and others last month: “The ban on advertising is, at its core, a ban on speech.” New York’s censure serves no compelling government interest, unless you count enriching various Democratic constituencies.

This is a classic restraint of trade, and all the more odious that it will hurt the people Democrats claim to champion. Airbnb points out that hosts in zip codes with the highest percentage of black New Yorkers earned $43 million from rentals in 2015, and that more than 21,000 millennials host an Airbnb property. New York’s progressives claim to love the little guy, but they love big business donors more.