The Airbnb logo.
Photograph by Getty Images
By Kia Kokalitcheva
December 6, 2016

Like in San Francisco, Airbnb has made an about-face in New York by dropping its lawsuit against the city over new regulations aimed at enforcing local short-term rental rules.

The company announced the change of heart on Friday after regulators said they wouldn’t punish the company if illegal short-term rentals are listed on its service, state assembly member Linda Rosenthal told Bloomberg. In October, Gov. Andrew Cuomo signed a law that would impose steep fines for advertising home rentals that violate New York City’s short-term rental rules that make it illegal for short-term rentals in multi-family buildings unless the host is present.

Airbnb immediately filed a lawsuit against both the state and New York City arguing that the new rules failed to make clear whether the company or only hosts who listed their homes on the site would be held responsible. Airbnb later agreed that the state is not responsible for enforcing the law.

“We very much see this as a material step forward for our hosts, with Airbnb and the City agreeing to ‘work cooperatively on ways to address New York City’s permanent housing shortage, including through host compliance with Airbnb’s One Host, One Home policy,'” Airbnb public policy spokesman Peter Schottenfels said in a statement, referring to the company’s new policy of letting hosts list only one home.

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“We look forward to using this as a basis to finding an approach that protects responsible New Yorkers while cracking down on illegal hotels that remove permanent housing off the market or create unsafe spaces,” he added.

As a last-ditch effort to persuade Cuomo to veto the law before ultimately acquiescing, Airbnb said it would take its new “One host, one home” policy a step further by preventing hosts from listing more than one property on its website. The company is doing something similar in San Francisco, where it also filed a lawsuit in June after the city’s Board of Supervisors passed a law that imposed steep fines for advertising illegal short-term rentals.

Despite marketing that focuses on community and caring for its hosts and guests, Airbnb’s response to these regulations seems to more focused on protecting itself. In New York, Airbnb backed down only after it received assurances that it wouldn’t be held responsible for illegal behavior by its hosts. Although Rosenthal told Bloomberg she expects the city to begin enforcement against “serial lawbreakers,” the new law could also be used against hosts who make smaller transgressions.

Even Airbnb’s main legal argument in the two lawsuits reveals that it’s mainly concerned about the law’s impact on its own business. While the company argued about the benefits of home sharing, its main legal argument was that the new regulations in San Francisco and New York undermine federal law that protects online services from being held accountable for what their users post.

In short, Airbnb sought to put the responsibility for any violations of the laws solely on its hosts’ shoulders.

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In San Francisco, Airbnb changed its tune and said it was open to working with city officials only after its original argument failed in court and a federal judge ruled that the new law was aimed at the company’s business operations, not the content of its website. In an op-ed last month, head of global policy Chris Lehane said that Airbnb could work with the city to create a simple registration process and share data about hosts with officials—a very different approach to its long-standing refusal to share user data with officials.

Things are still early in New York, but sharing data with city officials is “certainly up for discussion,” the company told Fortune.

Airbnb’s new approach is not surprising, however. The company must justify a $30 billion valuation and ensure as much flexibility as it inches toward an likely initial public offering.

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