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Why Airbnb Could Escape the Uber Trap in Europe

A woman browses the site of US home sharing giant Airbnb on a tablet in Berlin on April 28, 2016. John Macdougall—AFP/Getty Images

Airbnb and Uber are both seen as leading lights of the “gig economy” wave, turning regular people into service providers by putting them in touch with people who might want a ride in their car or a bed in their apartment. Both companies have had a tough regulatory time in the EU, largely thanks to protests from professional taxi drivers and hoteliers.

But there could be a big difference between the companies’ legality in European countries, and it all comes down to how much they control the business taking place on their platforms.

The difference was laid bare in an opinion released Tuesday by the top legal adviser to the European Union’s highest court, in a case involving Airbnb’s French operations. The French hospitality industry body AhTop lodged a complaint against Airbnb, claiming it was breaking the country’s housing laws by operating without an estate-agent license. The case made its way up to the Court of Justice of the European Union, whose advocate-general, Maciej Szpunar, said Airbnb should be in the clear.

The crucial question in the case was whether Airbnb heavily controls the transactions between accommodation providers and guests, or whether it connects them in a hands-off way. If it’s hands-off, then it qualifies as a so-called “information society service” that gets protections from certain national laws under a longstanding EU rule that’s designed to make it easier for digital services to operate across the bloc. If it exerts lots of control over what happens on its platform, it doesn’t get that classification, and countries get to regulate it more closely.

According to Szpunar, Airbnb doesn’t heavily control how accommodation services are provided over its platform, so the French housing law doesn’t apply to it. For example, he said, Airbnb doesn’t determine the price of a rental, and it lets hosts choose their own cancellation conditions. He also noted that Airbnb hosts don’t depend on the platform, as there has long been a short-term rental market for them to tap.

Contrast that opinion to Szpunar’s take two years ago on Uber, which was at the time being sued by Spanish taxi operators. At the time, he pointed out that Uber controls how much its drivers can charge, tells them where and when they can find the most business, and sets standards for the quality of their work. Uber drivers also can’t find passengers without the platform. Uber was in control, so it was classified as a transportation company, and Spain’s transportation laws therefore applied to it.

The Court of Justice agreed with Szpunar’s opinion, as it usually (but not always) does, and ruled against Uber in the Spanish case, then again in a similar French case. Uber now only uses licensed, professional drivers in those countries, in line with their laws.

If the court agrees with Szpunar again, then Airbnb will be off the hook for being regulated as a hotel company in the EU. And all because—unlike Uber—it doesn’t exert too much control over the accommodation arrangements struck on its platform.