Airbnb Inc on Monday agreed to settle a lawsuit against the city of San Francisco, putting to rest litigation that could have hampered the company’s efforts to expand and go public.
In the settlement, Airbnb essentially agreed to San Francisco’s demand to be more transparent about its hosts and to help enforce existing registration laws.
It followed the company’s dropping of a lawsuit in December last year over a New York law that fines people who illegally list their homes on short-term rental platforms.
Taken together, the actions mean Airbnb has cleared up outstanding litigation in two of its biggest markets in the US.
The latest settlement removes a regulatory cloud over the company as it readies itself for a public offering, even though Airbnb, which is based in San Francisco and has a valuation of about US$30 billion, still faces legal disputes in a handful of markets.
Airbnb chief executive Brian Chesky said earlier this year that the company could be ready to go public in a year.
“As Airbnb gears up to go public over the next couple of years, creating a stable environment with less regulatory uncertainty is good for them,” said Arun Sundararajan, a professor at New York University’s Stern School of Business who studies the sharing economy. “While it is well past the point where regulations pose an existential threat to the company, regulatory issues are still the biggest source of uncertainty about its future revenue streams.”
Airbnb and another short-term rental company, HomeAway Inc, brought the lawsuit against San Francisco in June last year over a decision by the San Francisco Board of Supervisors to fine the companies US$1,000 a day for every unregistered host on its service.
“Three years ago, we said the law being passed, which was written by Airbnb, won’t work because there was no skin in the game in terms of enforcement,” David Campos, a former member of the San Francisco Board of Supervisors, said at a news conference announcing the settlement.
Under the settlement between the city and the companies, Airbnb and other services such as HomeAway have to collect data from people who rent their homes out for less than a month on their Web sites. San Francisco is to use that information to vet and register hosts.
Companies such as Airbnb have to regularly provide the city with the data it needs to enforce local laws. The companies also have to cancel reservations and deactivate listings if the city notifies them of an invalid registration.
“There are 2,100 registered hosts and about 8,000 listed. We don’t have exact numbers, but it’s not a secret that there are a lot of folks gaming the system and violating the law,” San Francisco Attorney Dennis Herrera said.
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