Early last week, the New York Attorney General demanded that Airbnb, the company that allows you to rent or share a room or the entirety of your house or apartment, turn over all of its data on New York City’s estimated 15,000 hosts. The Attorney General issued a subpoena in the course of investigating Airbnb for breaking NYC’s hotel operating laws, which prohibits rental properties from being rented for less than 30 days at a time. One person has even been fined under this law, having rented out his apartment on Airbnb, although the fine was recently overturned. A recent court ruling also started that Airbnb is illegal, pitting a major player in the new sharing economy against the government of the most populace city in the country.
Airbnb has said they won’t comply with the subpoena, filing a motion with the New York Supreme Court and saying that the subpoena was too broad in its request. The New York Attorney General claims to be after the so-called “bad actors” on the site, who are using the site to find short term renters, renting out multiple units, and may be avoiding some taxes. Airbnb is sympathetic to that and has been cooperative in the past, but told Business Insider that the request “goes well beyond bad actors and demands information about thousands of regular Airbnb hosts on New York. So, we made it clear to the Attorney General’s office from the very beginning that we would never agree to this type of government sponsored fishing expedition.”
We’ve chronicled the travails of the sharing economy in the past, and the government bureaucracy and entrenched special interests that it often runs up against. Car sharing services like Lyft and Sidecar have run into problems, and most famously, Uber has butted up against city councils and taxi industry groups all over the country. This case with Airbnb is just one more example. Thankfully, some governments are embracing the new products and services, like in California, where ride-sharing has gotten the seal of approval from the California Public Utilities Commission.
When a company disrupts “business-as-usual” for politicians and Big Businesses trying to protect their interests, the government has a bad habit of stepping in and trying to “correct” the situation. What should be done is to let the disruption happen—in the sharing economy. These companies creating thousands of jobs and income for thousands more of its users, provides a valuable service for its customers, and creates tax revenue for the government. It’s creating a new, vibrant economy from nothing, generating wealth for people in New York City, around the country, and even around the world. In 2013, Airbnb is expected to generate $1 billion in economic activity in New York City alone. Governments should encourage this economic activity in their cities, not setup up hoops to jump through and bureaucratic hurdles to jump over. It’s companies like this, and economies like the ones it’s created, that could continue to create many more jobs into the future.
Zack Christenson writes on tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. To learn more about the Institute, visit www.theamericanconsumer.org.