HomeAway and Airbnb v. City of Santa Monica Brief of Amici Curiae Internet, Business, and Local Government Law Professors

The Communications Decency Act (CDA) has rightly been credited as the law that gave us the modern Internet, and its contributions to innovation cannot be overstated. Its main mechanism for doing so is found in Section 230 of the CDA — a provision that grants immunity to providers and users of interactive computer services from certain legal claims. 47 U.S.C. § 230. Section 230 has thereby allowed Internet and platform-based businesses (“platforms”) like Appellants, Airbnb and HomeAway, to flourish, with wide-ranging benefits to society. But while the coverage of Section 230 is undeniably broad, it is not unlimited. The City of Santa Monica Ordinance 2535CCS (the “Ordinance”) exemplifies the kind of regulations that are outside of Section 230’s scope. Put simply, the CDA does not preempt all regulation of the Internet. Neither does it provide blanket immunity from liability for platforms, like Airbnb and HomeAway, that facilitate transactions between users. What Section 230 does preempt is any regulation that imposes liability for the “publishing” function that those platforms perform on behalf of users. Because Airbnb and HomeAway engage in a wide range of transactional services and other activities that do not resemble the publishing of online content, even when that publishing function is broadly construed, they are not automatically immune from regulation as a consequence of Section 230. This is true regardless of the language in the statute’s findings and policy provisions. That language is highly aspirational and can only be understood in light of Section 230’s overall statutory structure, substantive terms and text, and the context in which it was enacted. These propositions should be uncontroversial and provide a starting point for answering the questions presented in this case. The central concept that limits the scope of Section 230 is “publishing activities.” Although the statute does not explicitly define “publishing” that does not mean there is no legal basis for distinguishing what constitutes an Internet platform’s publishing activities from its non-publishing functions. That basis is found in this Circuit’s prior decisions interpreting Section 230, which determined that publishing amounts to “reviewing, editing, and deciding whether to publish or to withdraw from publication third-party content.” The district court applied the same standard when deciding that the Ordinance does not impose liability on Airbnb and HomeAway. Specifically, it focused on the two core functions of publishing activity that are relevant for internet platforms: (a) “monitoring” of third-party content featured on their websites; and (b) “removal” of that same content. Airbnb and HomeAway do not contest that these are the key legal criteria. Instead they argue that the Ordinance requires them to monitor or remove content uploaded by their users. But the regulation does no such thing. It only prohibits Airbnb and HomeAway from entering into brokering contracts with short-term lessees (“hosts”) who are not properly licensed under local law. Because the substantive purpose of the Ordinance is to regulate the non-publishing activities of Airbnb and HomeAway, it does not trigger Section 230’s immunity. A limited scope for Section 230 immunity is not only well-settled as a matter of law, but also common sense as a matter of policy. Platforms such as Airbnb and HomeAway increasingly coordinate and facilitate physical activities in spheres (tourism, transportation, food services, and so on) that fall within the traditional purview of state and local governments. The mere fact that those corporations conduct some of their business on the Internet does not — and should not — immunize them from following regulations that address the market failures and other third-party harms that arise from non-publishing conduct. The principles of efficiency and fault that underpin most forms of business regulation apply with full force to the economic activities that platforms engage in as well. Denying local governments the authority to regulate the business practices of platforms that operate within their jurisdictions threatens the well-being of communities and upsets the proper balance between federal and state power.