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It may seem tangential to those who do not work in real estate, but there is a court case on the continent with major implications for the future of many sectors, which reached a critical phase yesterday.
It is the case of Airbnb vs the French tourism association, in which the latter claimed the US holiday lettings tech giant did not comply with French property laws. Specifically, they think it is operating as an estate agent without a licence.
Airbnb is a platform which lets property owners find holidaymakers to rent their property when they are not using it – a standard holiday lettings concept but on the absolutely massive scale that online versions of these things permits. The company has been controversial.
First, many cities claim it is creating residential ‘dead zones’ in the centres, where thousands of private properties are rented out instead of lived in.
Second, the let properties compete directly with traditional hotels but without many of the responsibilities – hoteliers who must contend with fire regulation, insurance and so on feel this is not a level playing field.
Third, the appetite among property owners is huge, and is creating a buy-to-let boom in dozens of major cities, driving up property prices and driving out ‘real’ residents.
But fair criticism is not how the law works, and the Court of Justice of the European Union (CJEU), has found that Airbnb is not an estate agent, but an “information society service”, absolving it of the need for a licence to operate as an estate agent in France.
While Britain looks likely to leave the European Union, we will remain under the jurisdiction of some of its court decisions for some time during the implementation period, and possibly beyond if the EU pushes hard to include a provision in any free trade agreement, so it counts here too.
The story is reminiscent of the argument about whether Uber cab drivers are employees of the company rather than just contractors, which is itself the same court dispute going on with Deliveroo ‘riders’. In short, the new frontier in business competition is one of seeing massive companies take huge chunks out of an existing market by essentially playing to different rules from the rest of the industry.
And that’s why it’s relevant to virtually every sector: competition today doesn’t just come from another business doing the same thing as you but better or cheaper, it comes from companies that claim not to be doing the same thing at all, even though everyone knows they are.
What I won’t do with today’s column is try to predict where this phenomenon will manifest next, but even 10 years ago, most people would not have predicted the astonishing rise of these particular companies, nor would they have anticipated such high leveraging of the concept of ‘marketplaces’ or ‘brokerages’, by which corporations can claim they are simply server and software companies.
That’s why I say, in a sense we’re all at risk outside the heady world of Silicon Valley entrepreneurship.
Really, the regulators need to get smarter, and governments need to give them more teeth. The tendency for monopolies to form at frightening pace in these spaces is now undeniable, and it is not a good thing for even the most ardent free marketeer if a handful of companies gobble everything up
