New York turns foe for Uber, Airbnb

Uber and Airbnb are finding New York — their biggest US market — is turning into an adversary.

New York has passed a bill freezing new issuances of ride-­hailing licences.

Uber Technologies and Airbnb were expected to find an ally in New York City, with its 8.5 million residents and burgeoning tech start-up scene.

Instead, the high-flying tech firms are finding the city — their biggest US market — is turning into an adversary.

This week, New York passed legislation that could hamper the Silicon Valley heavyweights at a crucial moment as they prepare for potential initial public ­offerings expected as early as next year.

Some investors and executives of the companies have privately expressed concern that New York’s restrictions could spur other cities to follow suit.

On Wednesday, despite weeks of lobbying by Uber, rival Lyft and others, the New York City Council passed a bill to freeze new issuances of ride-­hailing licences, a measure Mayor Bill de Blasio embraced.

And on Monday, Mr de Blasio signed legislation requiring Airbnb to disclose to the city ­detailed information about its hosts, which could wipe out a share of listings by cracking down on illegal rentals and spooking other hosts from ­listing. For now, the hold on new ride-hailing licences might not be a crushing blow — the freeze is for one year. And New York is unusual in requiring licences, unlike other cities that let drivers simply get approved by Uber.

But New York’s latest measures show how regulation remains an immense risk to tech stars’ financial health. Roughly a decade after these companies were founded, cities around the world are still wrestling with ­exactly how to measure and manage their social impact.

“These companies have tried to pre-empt a lot of regulation by reaching deals with states, but this move by New York really could empower cities and local governments across the country to find new ways to regulate them,” said Veena Dubal, an ­associate professor at University of California’s Hastings College of the Law.

The city will also set a minimum wage for drivers, with the companies on the hook to fill the gap if drivers don’t meet the threshold.

Airbnb, for its part, has built a prosperous business valued by investors at $US31 billion ($42bn) by enabling people to rent out rooms or entire homes as an alternative to hotels.

But its popularity has a downside for cities: people are buying up property to offer short-term rentals, sometimes illegally, straining the housing supply and driving up prices for lower-­income residents.

In New York, the issue revolves around a state law making it illegal in most city buildings to rent an apartment for less than 30 days unless the tenant is present at the same time. To help enforce the law, the city is requiring Airbnb to disclose the names and addresses of hosts to an agency that can fine the company $US1500 for any listing not accurately disclosed to the city.

It is a blow to Airbnb in one of the world’s most tourist-heavy cities, where it counts some 50,000 rental listings.