The European Court of Justice rules that Airbnb is not a real estate agent

Written on 22 Jan 2020

Airbnb, the digital platform that provides house rental services, has won a key battle against the hotel industry, after the European Court of Justice ruled that it is an information society service and, therefore, not subject to the rules of real estate agents.

The dispute began in France, where the Association for professional tourism and accommodation ("AHTOP", the French acronym) filed a lawsuit against Airbnb Ireland ("Airbnb") since it considered that the company's activity is not limited to using its electronic platform to put landlords (whether professional or not, and commonly known in the platform as hosts) in contact with tenants (also known as guests), but it also offers users additional services typical of the intermediation activity in real estate transactions. As a result, the AHTOP believed that Airbnb's activity should be governed by the Hoguet Law, which regulates the activity of real estate agents in France and requires that professionals in the real estate sector hold a licence in order to provide their services.

Faced with this allegation, Airbnb denied having such a role, as claimed by the AHTOP, and also stated that the Hoguet Law was not applicable since it was not compatible with the Directive on electronic commerce (Directive 2000/31/EC). The company argued that it acts solely as a "provider of an information society service".

This interpretation, completely opposed to the regulations applicable to Airbnb's activity, led the investigating judge of the Regional Court of Paris to submit a preliminary ruling to the European Court of Justice (ECJ). In its ruling, the ECJ considered that Airbnb's activity fulfilled the requirements set out in article 1.1 b) of Directive 2015/1535 as the company, in exchange for a fee, put tenants in contact with landlords who are offering short lease accommodation services; and without the simultaneous presence of either party. Therefore, Airbnb's business meets the necessary requirements to be classified as an "information society service", as claimed by the technological company, founded in the USA.

Thus, the position held by the ECJ exempts Airbnb from being regulated by the laws applicable to real estate agents in France, since, among other things, and in accordance with the court's ruling, the platform does neither have a decisive influence on the determination of prices, nor in the choice of landlords or accommodation. Likewise, the nature of the service offered (systematized property offers together with the tools for searching, locating and comparing such offers) has a relevance and independence that does neither allow for the service to be considered as ancillary to any another global service (offering accommodation services) nor it is essential for the provision of such global service.

Furthermore, the court understands that the additional services offered to users through Airbnb's platform (such as, among others, the option to take out a civil liability insurance, a tool to estimate the price of the rental or a system for rating users) do not alter its classification as a provider of an information society service, as the court considers these services to be added features and not part of the electronic intermediation service.

For the analysis of this matter, the ECJ brings up the judgments that issued, a sensu contrario, on 20 December 2017 (C-434/15) and 10 April 2018 (C-320/16), and which involved Uber, another well-known electronic services platform. In its resolutions, the court considered that the services carried out by Uber were "an integral part of an overall service whose main component is a transport service" and, accordingly, should not be classified as "an information society service", and should, therefore, be classified as a "service in the field of transport" for the purposes of Union Law. Therefore, it is for Member States to regulate the terms under which these services are provided, as long as the Treaty on the Functioning of the European Union is respected. In that case, the ECJ understood that Uber, unlike Airbnb, "exercises decisive influence over the conditions under which that service is provided by those drivers" and, specifically, states that "Uber determines at least the maximum fare by means of the eponymous application, that the company receives that amount from the client before paying part of it to the non-professional driver of the vehicle, and that it exercises a certain control over the quality of the vehicles, the drivers and their conduct, which can, in some circumstances, result in their exclusion". As we have seen, it is in this point precisely where the difference between Airbnb and Uber lies, that is, the control that both entities exercise over their respective businesses, which has resulted in the ECJ giving them a different classification.

Another issue on which the Luxembourg judges ruled, was whether or not the Hoguet Law applied to Airbnb, regardless of the company being considered a provider of an information society service. In this respect, the ECJ considers that, although French laws falls within the scope of the Directive on electronic commerce, it cannot be applied to the platform because, as set out in that Directive, France did not comply with the requirement of prior notification to the Commission and Ireland. It is worth mentioning that this would have not happened in Spain because, unlike France, real estate intermediation is fully deregulated in our country.

In short, with this ruling, the ECJ sets an important precedent for Airbnb to use in future negotiations with those governments that have tried –and in many occasions have succeeded– to limit the company's services. Likewise, this decision brings some clarity to the global discussion on the regulation of new business forms related to the collaborative economy and the Internet.