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Airbnb, the online service that helps individuals rent rooms to visitors, says it will fight a subpoena from New York Attorney General Eric Schneiderman, who is investigating possible violations of a 2010 state law that restricts short-term rental of properties not zoned as hotels.
"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," said David Hantman, Airbnb's head of global public policy, in a blog post, characterizing the company's resistance as an effort to protect hosts' privacy.
The law, enacted in 2011, appeared to make Airbnb rental illegal in New York City, though some people apparently try to get around the law by claiming visitors are exempt under the law's flexible definition of "family."
Airbnb won a legal victory late last month when it managed to get the New York City Environmental Control Board to reverse fines imposed on Airbnb host Nigel Warren for violating the short-term rental law. The board found that Warren's rental of his property was permissible because he was present in his apartment while renting a room out.
[ Can an increasingly wired physical world help traditional retailers catch up to Internet juggernauts like Amazon? Read Cisco Sees Gold In 'Internet Of Retailing'. ]
Though it has demonstrated a way for its 15,000 hosts in New York City to operate lawfully, and has committed to establishing a complaint hotline and paying occupancy tax in most cases as a way to placate authorities, Airbnb isn't out of the woods. According to the New York Daily News, the company has been less than cooperative in helping authorities go after Airbnb hosts who abuse the system.
Airbnb declined to comment beyond what it had already shared in public posts.
The company's legal challenge takes place amid a broad push-back by traditional businesses against the financial edge enjoyed by online rivals. Under siege for years from brick-and-mortar retailers that resented its lower tax burden, Amazon.com has finally accepted the inevitability of sales taxes.
Ride-sharing service Uber faces regulatory hurdles in Dallas, Denver, Portland and St. Louis. Just as the hotel industry sees a threat in online rental services, the taxi industry sees a threat in online ride-sharing services. A similar battle is taking place between restaurants and food trucks, which have grown in popularity in part because they can use the Internet to market themselves and share their location with fans.
Although Congress has extended the Internet tax moratorium until Nov. 1, 2014 and might yet do so again, taxes and rising regulatory costs appear to be inevitable for Internet companies.