The judgment by the CJEU in case C-390/18 clarifies the increasingly complex statutory rules governing digital platforms, where the actual control over the service provided is crucial. The importance lies in the facts, in how the conditions under which the service is provided to users are determined. For the CJEU, a mediation service such as the one provided by Airbnb cannot be considered an accommodation service. Let’s see.
In the summer of 2019 we published our observations on the conclusions by Advocate General (AG) Szpunar in case C-390/2018. Szpunar held that Airbnb did not act as a real estate agent, but as an information society service provider within the meaning of the Directive on electronic commerce. The difference is crucial, because as such, Airbnb is not subject to prior authorization nor to the requirements on the practice of activities laid down in real estate legislation, as the French association for professional tourism required.
The judgment handed down by the CJEU on December 19, 2019 clarifies the increasingly complex rules governing intermediation platforms. For the CJEU, Airbnb does not provide accommodation to rent, but rather facilitates the transaction for users on both sides of the platform: hosts and guests. In this context of intermediation, the key lies in the control over the conditions under which the service is provided, in this case, the accommodation services to which Airbnb’s intermediation service relates.
Although it is primarily a factual issue, it is useful to look at the factors that have led the CJEU to conclude that Airbnb provides information society services and not accommodation services:
- The CJEU very much bore in mind the fact that the intermediation service that Airbnb provides to users can be separated from the accommodation service. The Court considered that the value of Airbnb’s proposal lies in providing a tool to facilitate the conclusion of future transactions and, specifically, in the creation of an accommodation database.
- Secondly, the Court considered that Airbnb’s services are not essential to provide the accommodation service. As the CJEU indicated, offering properties for rent can be carried out through other channels such as estate agents, classified advertisements, or even property lettings websites, etc. The fact that there is competition between Airbnb and other traditional methods does not mean that it is providing the same type of services to users.
- Finally, the Court concluded that Airbnb does not appear to set the rent charged, an aspect to which the CJEU attaches particular importance. The mere existence of an optional tool to help hosts estimate the rental price with regard to the market average should not be seen as a price control tool, since it is ultimately the host that determines the price it seeks to offer.
The CJEU carried out a very useful analysis of a series of features that are commonly used by digital platforms which do not affect their nature as information society service providers, including:
- The use of tools to help users determine and choose the offer. In the case of Airbnb, a format for setting out the content of the offer, an optional photography service, a rating system etc. For the CJEU “such tools form part of the collaborative model inherent in intermediation platforms, which makes it possible, first, for those seeking accommodation to make a fully informed choice from among the accommodation offerings proposed by the hosts on the platform and, secondly, for hosts to be fully informed of the reliability of the guests with whom they might engage”.
- The collection of payment by the platform. For the CJEU “such payment conditions, which are common to a large number of electronic platforms, are a tool for securing transactions between hosts and guests, and their presence alone cannot modify the nature of the intermediation service, especially where such payment conditions are not accompanied, directly or indirectly, by price controls for the provision of accommodation”.
- The option for hosts to take out civil liability insurance through Airbnb to cover the damages that guests may cause.
In this context, the CJEU concluded that an intermediation service such as the one provided by Airbnb does not form part of an overall service, the main component of which is the provision of accommodation. Consequently, the platform cannot be required to comply with requirements on prior authorization and provision of services established in French legislation on accommodation services.
As indicated in our previous commentary, the rules applicable to digital platforms should be determined on a case-by-case basis in view of the services actually provided. The CJEU’s conclusions are not applicable to digital platforms in general, but they are undoubtedly a useful tool when it comes to analyzing the legal framework applicable to the different business models of the so-called platform economy.