Home-sharing service Airbnb.
Photograph by JOHN MACDOUGALL AFP/Getty Images
By Kia Kokalitcheva
August 11, 2016

As Airbnb continues to fight a new potential New York state bill that would further trample on its business model, big names like actor and investor Ashton Kutcher, PayPal co-founder and investor Peter Thiel, and Facebook co-founder Chris Hughes have come to its aid.

The group sent a letter to New York Governor Andrew Cuomo on Monday to urge him to veto the bill that the state senate and assembly passed in June. The bill would make it illegal to advertise short-term rentals that violate New York City’s rules that prohibit rentals for less than 30 days without the owner or main resident present. Violations could result in fines up to $1,000 for a first offense, up to $5,000 for a second offense, and up to $7,500 for a third and each subsequent.

“Home sharing in New York is now in jeopardy,” reads the letter. “We are increasingly concerned New York legislators are turning their backs on innovation, saying no to technology and siding with the entrenched interests that have controlled Albany for too long.”

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The bill is a bit of an awkward fight. On one hand, it would impose additional sanctions on folks who violate New York City’s short-term rental regulations, thereby further pushing regulations against home-sharing.

But on the other, it’s also simply reinforcing existing regulations. “The bill says: You can’t advertise an illegal activity,'” Assemblywoman Deborah Glick, a Manhattan Democrat who supported the bill told the Wall Street Journal in June when it passed. “I don’t know what the big confusion is.”

Like other companies whose business models are fairly new, Airbnb sometimes operates in a regulatory gray zone. In some cities, states, or countries, there’s not yet regulation deeming home-sharing legal or not, so it’s been able to operate while working with lawmakers in the hopes of passing favorable legislation. But in the case of New York or even San Francisco, where there are laws for short-term rentals, they’re not as easily enforceable, largely because Airbnb doesn’t share data about its users with city officials.

However, the company has started to strike deals with certain cities, like San Francisco, to collect and remit taxes on behalf of its hosts, a sort of middle ground that lets the city benefit from tax revenue without getting access to user data. Airbnb estimates that under such a deal with New York City, it would have collected a total of $90 million in combined state and city taxes over the past year, according to a spokesman.

Cuomo has until January to sign or veto the bill, which means this is likely not the last of Airbnb’s efforts to fight it. Despite its difficult regulatory environment, New York City is an important market to Airbnb. Not only does the company continue to fight unfavorable regulations, but it also agreed in 2014 to hand over data about some of its listings after a long battle with New York Attorney General Eric T. Schneiderman. Last year, it also made anonymized data about New York City listings available, but only by appointment at Airbnb’s New York office.

Last month, co-founder and CEO Brian Chesky said at Fortune’s Brainstorm Tech conference in Aspen, Colo., that cities like New York and San Francisco, while only representing a small portion of Airbnb’s revenue, are very important to its community.

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