The Real Deal New York

The real reason New York State is going after Airbnb: OPINION

Short-term hotel rental startup threatens to disrupt traditional business model
May 05, 2014 12:30PM

New York State Attorney General Eric Schneiderman’s subpoena of Airbnb hosts is really about a battle between established industry players and one of many new companies angling to disrupt traditional ways of doing business, according to Zachary Karabell’s recent Slate column.

In Karabell’s view, companies like Airbnb represent a wave of new companies that threaten to disrupt both existing industries and existing laws. Much like fellow game changers Uber on the transport front and Aereo in the television world, Airbnnb uses technology to connect buyers and users without the traditional go-between, thus placing the hotel industry’s hundreds of billions of dollars at stake. What is needed, he argues, is a balance between using current laws and regulations to “protect the common good without choking innovation.”

“The only way that new models will avoid the snare of old-guard companies and ill-considered laws is for regulations and laws to adapt to new technologies and new business models, rather than be used as tools to inhibit them,” he writes.

Clearly, taxes are a concern for city and state officials. A spokesman for the AG earlier this year told NY1 News, “New York can’t afford to leave this much money on the table.” But Schneiderman — in his first public remarks on the legal wrangle in New York State Supreme Court — also vowed to protect the state’s “extraordinarily successful” hotel industry. In addition, he accused the San Francisco-based startup of misrepresenting its business model to investors as the company gears up for an initial public offering later this year. A court heard arguments on the case last month, during which Airbnb pushed for the subpoena to be dropped. But the judge overseeing the case did not issue a ruling or say when one might come. [Slate]Julie Strickland