AirBNB and the European Union: a regulation based on case law

According to the Court of Justice of the European Union, Airbnb is an information society operator and not a real estate agent.

In its judgment of 19 December 2019 in the Airbnb Ireland case (C-390/18), the Grand Chamber of the Court of Justice of the European Union added a new piece to the regulatory framework – still in progress and largely based on case-law – applicable to the platform economy. In fact, the judgment focuses on classifying the business practice carried out by Airbnb and the need for the latter, considering different national regulations, to have specific qualifications to operate. This is a vital issue for many platforms which, due to the vagueness of the regulatory and case-law framework, operate in objective uncertainty in terms of market access requirements.

The case originates from a complaint lodged against Airbnb Ireland by the Association pour un hébergement et un tourisme professionnels (the French association for professional accommodation and tourism, AHTOP), which claims that Airbnb conducts real estate brokerage activities without having the license required under French law. For its part, Airbnb defended itself by arguing that it is not a real estate agent but rather an “information society operator” within the meaning and for the purposes of Article 2(a) of Directive 2000/31/EC and, as such, is not subject to additional authorization requirements when operating outside the country of establishment under the free movement of services scheme.

The judgment of the Court of Justice is based on a direction of case law which includes, among others, the judgments on the Uber France (C-320/16) and Uber Spain (C-434/15) cases, delivered with reference to the ride hailing platform business. With regard to the nature of the business provided by the two platforms, however, the Court came to diametrically opposed conclusions.

In the case of Uber, the CJEU considered that the platform is essentially a transport operator (and not merely an “information society operator” within the meaning of Directive 2000/31 providing IT services). The reason behind this was found to be that Uber’s function of bringing drivers and passengers together were not unrelated to the final service provided (i.e., the transport service), but on the contrary was only a minor component. Consequently, by mainly providing a transport service, Member States can require the activity of drivers operating on the platform to comply with the rules on the authorization of professional drivers. In other words: Uber’s drivers must obtain an authorization to carry out this activity, otherwise Uber can be considered to operate – essentially – illegally.

As has been said, however, in the case of Airbnb, opposite conclusions were reached. The judgment of 19 December 2019, in fact, stated that Airbnb was not a real estate agent because its business had “dignity” and functions that were separate from the final service of providing short-term accommodations. Indeed, the service offered by Airbnb is not aimed exclusively at providing accommodations, but rather constituted “a tool for presenting and searching accommodations available for rent, to facilitate the conclusion of contracts concerning future interactions” and for this reason cannot be regarded as “merely ancillary to an overall service coming under a different legal classification, namely provision of an accommodation service”. Furthermore, it was noted that (i) the mediation carried out by Airbnb is not entirely indispensable for the provision of accommodation services, as tenants and landlords already have numerous other channels to use for this purpose (such as on-line or physical advertisements or real estate agency advertisements) and that (ii) there is no evidence of any decisive influence of the platform in determining the rental price (contrary to what, according to the Court itself, was the case for Uber). For this reason, Airbnb does not qualify as a real estate agent, but rather as an “information society operator”, with the result that it must be allowed to operate in France even though the company does not have the license required by law for operators in the sector.

The practical impact of a judgment, such as the one under consideration, on the business of a company like Airbnb is clear. In the same way, in general, it is clear that market access conditions such as the need to obtain authorizations or licenses can have a significant impact on the very life of platforms for the provision of goods and services.

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