Earlier today the Court of Justice delivered a
judgment in case C-390/18 Airbnb Irelend. The ruling largely follows the
earlier opinion of Advocate General Szpunar, on which we reported in a previous
post. Similarly to the widely discussed judgment in Uber Spain and Uber France,
the commented case concerned the applicability of E-Commerce Directive to
services provided by operators of the so-called collaborative platforms. In the
judgment issued today the Court drew upon the criteria developed in Uber, yet the factual context in the
case at hand ultimately led it to a very different conclusion. Most
importantly, following the judgment, services such as those provided by Airbnb do fall within
the scope of Directive 2000/31/EC on electronic commerce. Consequently,
free movement of such services from other Member States can only be restricted
under national law if substantive and procedural conditions laid down in that
Directive are fulfilled. While the judgment, of course, comes in the context of preliminary ruling procedure, the interpretation provided by the Court is clearly favourable to the platform provider - at least with respect to its core market segment (and not eg Airbnb Plus).
Facts of the case
The case focused on the activities of Airbnb
Ireland, a company established in Dublin under Irish law, offering an
electronic platform which allows hosts with accommodation to rent and
prospective guests to establish contact with one another. The company also
offers host and guests a number of additional services, such as a format for
setting out the content of an offer, photography services, civil liability
insurance, a guarantee against damages, an optional tool for estimating the
rental price and a reputational feedback system. The monetization occurs
primarily via commission, collected from guests by Airbnb Payments UK Ltd
along with other charges.
The business model of Airbnb has met with criticism of the incumbent players in the travel sector. In the present context, the Association for professional tourism and accommodation in France (AHTOP) argued that activities of Airbnb violated the applicable national rules regulating certain transactions concerning real property and financial goodwill (Hoguet Law). Pursuant to this law, mediation and management of buildings and businesses could only be undertaken after having obtained a professional licence. Airbnb did not have the relevant license, but contested the AHTOP’s claims, arguing that the Hoguet Law was in any case not enforceable against it, as it did not comply with requirements set out in Article 3(4) of the E-Commerce Directive.
Judgment of the Court
Qualification of services provided by Airbnb
The judgment issued today appears to be a big win for Airbnb. Most importantly, according to the Court, its business model is to be distinguished from activities of Uber, which were qualified not as information society services, but rather as services in the field of transport. Importantly, in reaching that conclusion the Court did not distance itself from the Uber judgments. On the contrary, the test to be undertaken in order to establish whether an intermediation service, which prima facie qualifies as an information society service, forms an integral part of an overall service whose main component is a service of a different kind (transport service, accommodation service), has also been applied in the present case. In this regard, particular attention is to be paid to the ‘market maker’ and ‘decisive influence’ criteria. According to the Court, neither of these criteria has been fulfilled with respect to Airbnb.
In Airbnb Ireland, the Court found that the essential feature of the analysed platform was the creation of a list of offers for the benefit of hosts and guests. Services of this kind, provided by the operator, were not considered indispensable to the provision of accommodation services. The Court further found that Airbnb did not exercise decisive influence over the conditions under which accommodation services were provided, in particular it did not determine (directly or indirectly) the rental price charged. Also the provision of ancillary services did not call into question the separate nature of the intermediation service provided by that company and therefore its classification as an ‘information society service’. Consequently, services provided by Airbnb assessed in the present judgment qualified as ‘information society services’ and could benefit from the liberalisation framework laid down in the E-Commerce Directive.
Unenforceability of free movement restrictions
In the second part of the judgment the Court analysed whether an individual, such as Airbnb, may oppose the application to him or her of measures of a Member State restricting the freedom to provide an information society service which that individual provides from another Member State, where those measures do not satisfy all the conditions laid down in Article 3(4) of Directive 2000/31. Also in this regard, the Court responded in the affirmative, finding that free movement restrictions which, among others, have not been duty notified to the Commission are to be considered unenforceable against the provider in question. A similar conclusion had previously been reached by the Court with respect to the notification of technical rules under Directive 2015/1535. This line of case law is now explicitly extended to the E-Commerce Directive.
The conclusion reached by the Court in the commented part of the judgment was supported by a number of arguments. Firstly, the notification requirement set out in Article 3(4)(b) of Directive 2000/31 was considered to be sufficiently clear, precise and unconditional to confer on it direct effect and, therefore, it may be invoked by individuals before the national courts. What is more, despite certain differences between Directives 2015/1535 and 2000/31, in both cases the notification obligation was characterised not as a mere requirement to provide information, but rather an essential procedural requirement, which in turn justified the unenforceability of non-notified measures restricting the freedom to provide an information society service against individuals. Importantly, the fact that contested national law predated the entry into force of Directive 2000/31 had no bearing on this assessment.
Concluding thought
The commented judgment is another major building block to the EU legal framework in the so-called collaborative economy. The Court attempts to draw a line between particular business models of platform operators, following the previously developed ‘market maker’ and ‘decisive influence’ criteria. In the case at hand the effects of that reasoning have been clearly favourable to the platform provider. Accordingly, Member States’ freedom to regulate services of this kind, provided from other Member States, is limited by substantive and procedural conditions laid down in Article 3(4) of the E-Commerce Directive. This, however, does not mean that no independent national regulation of services like the ones provided by Airbnb is possible. One can well imagine national rules, which fulfil both sets of criteria, including the substantive ones related to consumer protection. Whether or not Member States will further attempt to regulate services provided by collaborative platforms – or particular components thereof, like rating or insurance – is still an open question. Further regulatory tendencies in that direction may ultimately strengthen a case for a targeted harmonisation at the EU level.
Facts of the case
The case focused on the activities of Airbnb
Ireland, a company established in Dublin under Irish law, offering an
electronic platform which allows hosts with accommodation to rent and
prospective guests to establish contact with one another. The company also
offers host and guests a number of additional services, such as a format for
setting out the content of an offer, photography services, civil liability
insurance, a guarantee against damages, an optional tool for estimating the
rental price and a reputational feedback system. The monetization occurs
primarily via commission, collected from guests by Airbnb Payments UK Ltd
along with other charges.The business model of Airbnb has met with criticism of the incumbent players in the travel sector. In the present context, the Association for professional tourism and accommodation in France (AHTOP) argued that activities of Airbnb violated the applicable national rules regulating certain transactions concerning real property and financial goodwill (Hoguet Law). Pursuant to this law, mediation and management of buildings and businesses could only be undertaken after having obtained a professional licence. Airbnb did not have the relevant license, but contested the AHTOP’s claims, arguing that the Hoguet Law was in any case not enforceable against it, as it did not comply with requirements set out in Article 3(4) of the E-Commerce Directive.
Judgment of the Court
Qualification of services provided by Airbnb
The judgment issued today appears to be a big win for Airbnb. Most importantly, according to the Court, its business model is to be distinguished from activities of Uber, which were qualified not as information society services, but rather as services in the field of transport. Importantly, in reaching that conclusion the Court did not distance itself from the Uber judgments. On the contrary, the test to be undertaken in order to establish whether an intermediation service, which prima facie qualifies as an information society service, forms an integral part of an overall service whose main component is a service of a different kind (transport service, accommodation service), has also been applied in the present case. In this regard, particular attention is to be paid to the ‘market maker’ and ‘decisive influence’ criteria. According to the Court, neither of these criteria has been fulfilled with respect to Airbnb.
In Airbnb Ireland, the Court found that the essential feature of the analysed platform was the creation of a list of offers for the benefit of hosts and guests. Services of this kind, provided by the operator, were not considered indispensable to the provision of accommodation services. The Court further found that Airbnb did not exercise decisive influence over the conditions under which accommodation services were provided, in particular it did not determine (directly or indirectly) the rental price charged. Also the provision of ancillary services did not call into question the separate nature of the intermediation service provided by that company and therefore its classification as an ‘information society service’. Consequently, services provided by Airbnb assessed in the present judgment qualified as ‘information society services’ and could benefit from the liberalisation framework laid down in the E-Commerce Directive.
Unenforceability of free movement restrictions
In the second part of the judgment the Court analysed whether an individual, such as Airbnb, may oppose the application to him or her of measures of a Member State restricting the freedom to provide an information society service which that individual provides from another Member State, where those measures do not satisfy all the conditions laid down in Article 3(4) of Directive 2000/31. Also in this regard, the Court responded in the affirmative, finding that free movement restrictions which, among others, have not been duty notified to the Commission are to be considered unenforceable against the provider in question. A similar conclusion had previously been reached by the Court with respect to the notification of technical rules under Directive 2015/1535. This line of case law is now explicitly extended to the E-Commerce Directive.
The conclusion reached by the Court in the commented part of the judgment was supported by a number of arguments. Firstly, the notification requirement set out in Article 3(4)(b) of Directive 2000/31 was considered to be sufficiently clear, precise and unconditional to confer on it direct effect and, therefore, it may be invoked by individuals before the national courts. What is more, despite certain differences between Directives 2015/1535 and 2000/31, in both cases the notification obligation was characterised not as a mere requirement to provide information, but rather an essential procedural requirement, which in turn justified the unenforceability of non-notified measures restricting the freedom to provide an information society service against individuals. Importantly, the fact that contested national law predated the entry into force of Directive 2000/31 had no bearing on this assessment.
Concluding thought
The commented judgment is another major building block to the EU legal framework in the so-called collaborative economy. The Court attempts to draw a line between particular business models of platform operators, following the previously developed ‘market maker’ and ‘decisive influence’ criteria. In the case at hand the effects of that reasoning have been clearly favourable to the platform provider. Accordingly, Member States’ freedom to regulate services of this kind, provided from other Member States, is limited by substantive and procedural conditions laid down in Article 3(4) of the E-Commerce Directive. This, however, does not mean that no independent national regulation of services like the ones provided by Airbnb is possible. One can well imagine national rules, which fulfil both sets of criteria, including the substantive ones related to consumer protection. Whether or not Member States will further attempt to regulate services provided by collaborative platforms – or particular components thereof, like rating or insurance – is still an open question. Further regulatory tendencies in that direction may ultimately strengthen a case for a targeted harmonisation at the EU level.
* The author carries out a research
project on consumer protection in the collaborative economy, financed by
the National Science Centre in Poland on the basis of decision no.
DEC-2015/19/N/HS5/01557.
