October 7, 2013 / 10:03 PM / in 5 years

Airbnb says New York probe risks customers' privacy

SAN FRANCISCO, Oct 7 (Reuters) - Airbnb, a red hot online accommodations service, may have to disclose user data to the government, possibly to the detriment of its customers’ privacy and its own business prospects.

On Friday New York State Attorney General Eric Schneiderman sent Airbnb a subpoena requesting host data from New York users of the service, which connects vacationers and others with people wishing to rent out their homes, apartments and other living spaces to short-term guests.

At issue is the compliance of Airbnb hosts with state law, which places restrictions on short-term apartment rentals. Schneiderman’s office has been investigating the issue for more than a month, a person familiar with the investigation said. The response is due on Wednesday, the person said.

The subpoena could uncover the names and identities of the thousands of New Yorkers who have used Airbnb, potentially creating a chilling effect on it and on similar services, said Jeremiah Owyang, founder of Crowd Companies, a firm that advises companies on the collaborative economy.

“People are concerned about being on some blacklist or graylist,” Owyang said. “It might deter new customers.”

To fight the subpoena, Airbnb could need to file a court motion to quash it, said Nick Cardozo, an attorney at the Electronic Frontier Foundation, an advocacy group.

“We always want to work with governments to make the Airbnb community stronger, but at this point, this demand is unreasonably broad and we will fight it with everything we’ve got,” David Hantman, Airbnb’s head of public policy, wrote in a blog post on Sunday.

“If the subpoena is upheld, it should be upheld only with a very strict privacy protective order,” Hantman said, so that data does not get broadly disclosed, for example, to hosts’ landlords who want to keep close tabs on their tenants.

Schneiderman is not targeting casual users who might be renting their apartments while on vacation, the person familiar with the matter said. Rather, he is seeking information on property managers or brokers who skirt the law by renting multiple units, or people who rent their primary unit for extended periods of time throughout the year, the person said.

The attorney general has said he sees no need to change state law to accommodate services like Airbnb, but Airbnb Chief Executive Brian Chesky wants clarification of the law.

“We believe regular people renting out their own homes should be able to do so, and we need a new law that makes this clear,” wrote Chesky in his post last week, referring specifically to New York.

Airbnb also faces another challenge, an easy way to ensure that guests pay local taxes, including occupancy taxes. Some hotels have argued that nonpayment of the taxes puts them at an unfair disadvantage.

Last week, Chesky took to his blog to say that hosts should pay occupancy taxes. A second person familiar with the matter said the stance on taxes was the result of months of work at Airbnb with communities around the world and was not directly tied to ongoing talks with the state attorney general’s office.

One tactic Airbnb likes to use in its efforts to win over local officials is a series of reports that show Airbnb is boosting local coffers. Earlier this year, for example, Airbnb released a study showing that guests and hosts in Paris contributed $240 million to the local economy.

A similar report is in the works for New York. (Reporting by Sarah McBride; Editing by Steve Orlofsky)

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