Innovation opponents won a big victory late last week when New York Governor Andrew Cuomo signed into law a new anti-Airbnb bill.
The legislation imposes heavy penalties for advertising online units being rented in violation of a 2010 New York law. Under 2010 law, one of the most extreme in the nation, rentals of fewer than 30 days cannot be advertised online (unless the owner is going to be present while the visitor is renting the space). Violators face fines of up to $7,500 per violation. That's about the average amount Airbnb renters make in a year!
Renters and travelers are concerned that they are losing a valuable source of income or means of visiting the pricey city and saving money:
Lee Thomas said renting an apartment at his Queens home has helped him get through an illness. “It’s allowed me to make ends meet while I was looking at mountains of medical bills, and survive in a very expensive city,” the 57-year-old said.
Tourists expressed concern that they would lose out.
“If you limit the stay to over 30 days, you are going to lose university students who want to visit for a weekend,” said James Kifford, 26, of Australia who was sightseeing in Times Square on Sunday. “And they are going to lose the insider’s experience, the true local’s experience that you don’t get in a hotel.”
As the Wall Street Journal explains, the bill passed the state legislature in June with strong backing from – not surprisingly – hotel unions and other interest groups. Proponents of the restrictions claim Airbnb has exacerbated s shortage of affordable housing in the city, a claim popularized by Democratic Senator Elizabeth Warren. Recently, New York City Council members joined in signing a letter to the Federal Trade Commission asking for the agency to look into Airbnb.
ShareBetter is a coalition of unions, elected officials, and housing and tent activists with a cheerful name but anti-innovation motives. Their strategist Neal Kwatra exposed their real views about those who would dare compete with entrenched industries in an interview:
“Airbnb sounds and acts a lot like Donald Trump these days," [Neal Kwatra, a strategist for the ShareBetter coalition] said. "Both say everything is biased and rigged against them and they both sue anyone and everyone who tries to hold them accountable for breaking the law."
"Airbnb has created a new class of victimhood-the beleaguered $30 billion corporation who screams bias whenever they are asked to follow the law," he said.
New York has a track-record for going after online companies. Earlier this year, ride-sharing companies, Uber and Lyft, lost their bid to expand upstate. Online fantasy sports betting websites FanDuel, DraftKings, and Yahoo were shut down temporarily by the state attorney general. Airbnb has been fighting a campaign to state legitimate in New York, so the passage of legislation last Friday is another nail in the coffin.
Tech experts say this hostile environment make tech firms run the other way:
"It is absolutely an issue of concern that New York is gaining an anti-tech reputation," said Julie Samuels, executive director of Tech:NYC, an advocacy group. "That would be incredibly unfortunate. But when you see legislation pass that makes it very difficult for firms to operate here, it definitely sends a message we think will make it harder to attract tech talent and tech entrepreneurs."
Hours after Cuomo signed the bill, Airbnb filed suit in a federal district court contending that the law violates the company’s protection from being held responsible for content published by users on their site – afforded by the Communications Decency Act- as well as constitutional rights of free speech and due process. The New York Times reports:
The new law “would impose significant immediate burdens and irreparable harm on Airbnb,” the company said in its complaint. “In order to be assured of avoiding liability, including potential criminal prosecution, Airbnb would be required to screen and review every listing a host seeks to publish.”
“In typical fashion, Albany back-room dealing rewarded a special interest — the price-gouging hotel industry — and ignored the voices of tens of thousands of New Yorkers,” said Josh Meltzer, head of the company’s New York public policy.
The fate of Airbnb in New York is not sealed. If nothing else, the backlash from the public may provide pressure on the governor and legislature.
Once again, we’re seeing how the fight against innovation continues.