Airbnb might lose the fight of its life—or at least the trust of its customers—the very same week that it officially closed a deal for $450 million in venture capital. The New York Post reports that state Attorney General Eric Schneiderman will go forward with a subpoena "to identify users who are illegally renting out apartments."
The subpoena demanding user data on 15,000 hosts was originally filed in October. However, Airbnb was in settlement talks with the AG's office as of last week. Negotiations failed spectacularly, from the sounds of it. Both sides have come out swinging.
Airbnb sent a somewhat unhinged and misleading email out yesterday (pasted below) making Schneiderman sound like Ayn Rand's personal boogeyman. Then this morning, AG's office filed an affidavit in Albany (embedded below) claiming that 64 percent of Airbnb listings in New York are illegal. Oral arguments around the subpoena begin tomorrow.
Sixty-four percent illegal doesn't match what Airbnb has said before. In February, the company told Skift: "87 percent of Airbnb hosts in New York share only the home in which they live." But that description seems to designed to say very little. New York law says permanent residents must be present in the apartment if they're going to sublet it for less than 30 days.
In response to questions from Valleywag, Schneiderman's press secretary said:
"Attorney General Schneiderman has worked in partnership with innovative tech companies like Facebook and Yelp! to curb illegal activity on their sites. It's disappointing that AirBnB has taken a different approach, with name calling and PR campaigns to confuse the issue and evade the law."
Airbnb has been astroturfing in New York for the sharing economy and is now using the same approach in San Francisco. As for the name-calling, here are some choice words from the email from yesterday. It was written by David Hantman, Airbnb's head of global public policy. Emphasis mine:
"...the Attorney General made it clear that he will seek personal data on our users until the end of time."
" The Attorney General has now modified his request for data about our community. Barely. If you're one of the thousands of New Yorkers who has ever rented out your place while you were away for a weekend, the Attorney General still wants to know who you are and where you live."
"The government will accuse Airbnb hosts of being bad neighbors and bad citizens. They'll call us slumlords and tax cheats. They might even say we all faked the moon landing."
"Taking on an Attorney General who is determined to fight innovation and attack regular people isn't easy and we won't succeed without standing together."
I'm sure Schneiderman can handle the harsh feedback. He must be ticked off too if he's using the same raw data from January for his affidavit, which Skift already analyzed. Airbnb's expert evasion is a bigger concern than its bluster.
Here's how their cases breaks down. The AG's office is asking for data on hosts (not the renters) who are subletting their "entire apartment" for less than 30 days because that violates the law about being present. It's also possible that Schneiderman is looking for potential unpaid taxes, along with checking on consumer protections, like fire safety.
In the email, Hantman argues:
"Short term rental laws were never meant to apply to New Yorkers occasionally renting out their own home."
Airbnb isn't doing itself any favors with the innocent act. Hantman also claimed:
"The small group of bad actors that abused our platform aren't part of the Airbnb community anymore, or they are on their way out the door. "
But the affidavit says more than 200 listings came from only five sources, indicating that a third party is renting out the locations: "The top five hosts by number of listings had the following number of listings: 80, 35, 31, 29 and 28." Schneiderman's office said you can still find repeat offenders on the site.
Even if the court squashes the subpoena, it can't feel good to know data that could affect taxes or standing with a landlord came so close to an attorney general's hands, especially when Airbnb has not put much of that $776 million toward a fair warning. Maybe that's what happens when you write about how not to "fuck up" your company culture, without ever really explaining what your culture is.
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Here is Hantman's email:
Last year, we were shocked when the New York Attorney General demanded personal information about thousands of New Yorkers who share their space on Airbnb. But we were amazed at what happened next. Everyone in the Airbnb community, people who care about privacy and countless New Yorkers said enough is enough. This attack on thousands of regular New Yorkers who occasionally rent out their homes was a wrongheaded waste of time and law enforcement resources. We weren't going to take it.
I heard you speak out at meetings in New York and online. And I was honored to stand with you. But I didn't anticipate sending this email because I never thought we'd be talking about this issue so many months later.
The Attorney General said he was going after a few bad apples, so we were optimistic that we would resolve this matter. But actions speak louder than words. Time and time again, the Attorney General has demanded personal information about thousands of New Yorkers. He professed to be interested in collecting more tax dollars for New York. Last week, we once again campaigned to change the law so our community can contribute $21 million in taxes to New York.
In response, the hotel lobby said it would fight this common-sense proposal and the Attorney General made it clear that he will seek personal data on our users until the end of time. The Attorney General has now modified his request for data about our community. Barely. If you're one of the thousands of New Yorkers who has ever rented out your place while you were away for a weekend, the Attorney General still wants to know who you are and where you live.
So, the fight continues. I want you to know what happens next.
On Tuesday, Airbnb will be in court in Albany, fighting the Attorney General's demand for your data. The government will accuse Airbnb hosts of being bad neighbors and bad citizens. They'll call us slumlords and tax cheats. They might even say we all faked the moon landing.
That's OK. We know the truth and we'll fight to make sure the court and everyone in New York hears some simple facts:
- The vast majority of our community members are regular New Yorkers just trying to make ends meet.
- We want to collect and remit taxes on behalf of our hosts, and lobbyists for the big hotels are standing in our way.
- Short term rental laws were never meant to apply to New Yorkers occasionally renting out their own home.
- The small group of bad actors that abused our platform aren't part of the Airbnb community anymore, or they are on their way out the door.
- Our community will generate $768 million in economic activity in New York in this year alone.
The judge in this case could issue a ruling on Tuesday, or take weeks or even months to make up his mind. He could rule in our favor, or against us. He might ask the Attorney General to narrow his demand. If we are ordered to hand over any data, we will work to ensure you are properly notified before the government receives any information about you or your listing.
No matter what happens in the courtroom, we'll be holding a community meetup in New York City on Wednesday at 7:00 PM and a webinar on Thursday at 11:00 AM. At each event, we'll answer your questions and discuss the next steps. We'll email additional details about these events in the coming days.
Taking on an Attorney General who is determined to fight innovation and attack regular people isn't easy and we won't succeed without standing together. We'll do everything we can to keep you informed about this case and our work to fix the bad law that made it possible.
Finally, know this - New York is lagging behind the rest of the world when it comes to the sharing economy for now, but that won't last forever.
City after city is embracing our hosts and the sharing economy. Hamburg, then Amsterdam, and now France have all changed their laws and to support homesharing. San Francisco might be next. Someday, New York will join them. Someday, our amazing community and the passion they have for New York will break through opposition from people like Attorney General Schneiderman. We saw how our hosts banded together after Superstorm Sandy to open up their own homes to people in need, and that kind of love for New York and for New Yorkers manifests itself every day in countless other ways Eventually, the small group of politicians who feel they must oppose us will fall away, and New York will truly become a Shared City.
Standing together, showing the world who we are and what we stand for, we will turn the tide in New York.
Thank you for all you do.
Head of Global Public Policy