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Airbnb dealt blow as judge rejects bid to block SF law

The battle between the home-rental site and San Francisco rages on as judge rules in favor of the city.

Airbnb supporters rally in front of San Francisco City Hall in 2015.

Dara Kerr/CNET

Airbnb suffered a loss on Tuesday when a federal judge rejected the company's plea to change a San Francisco law that requires the home-rental company to block or remove hosts who haven't registered with the city.

Airbnb sued the city of San Francisco in June saying the city law violates federal laws, including the Communications Decency Act, the Stored Communications Act and the First Amendment. On Tuesday, US District Judge James Donato ruled this wasn't the case, according to Reuters.

This decision could have major repercussions for Airbnb. The home-rental company, which now has more than 2 million listings in nearly 200 countries, has used similar arguments in its battles with other cities, including New York. Additionally, lawmakers throughout the US are looking to San Francisco to set an example of how to regulate the eight-year-old startup.

San Francisco passed a law officially legalizing Airbnb in 2014, but since then some city officials and residents have tried to tighten these rules. Critics accuse Airbnb of contributing to tighter housing markets, with landlords taking rental units off the market to capitalize on short-term rentals. The current debate is over an amendment to that original law.

This amendment requires short-term rental companies, like Airbnb and VRBO, to remove listings from their websites that don't have the city's required registration number. Failure to remove such listings could open up the companies to thousands of dollars in fines and criminal charges.

The amendment does not change requirements for Airbnb hosts in San Francisco. However, more than 75 percent of the 7,000 Airbnb hosts in San Francisco are not registered, as required, and continue to be listed on the site, San Francisco Supervisor David Campos said in June.

Even though Donato rejected Airbnb's request to block the amendment, which was approved in June and went into effect in August, the judge also said more needed to be done around how to enforce the law.

"While we appreciate that the judge has acknowledged our concerns about the inadequacy of the screening obligations in the new law..." an Airbnb spokesman said in an emailed statement, "We respectfully disagree with the remainder of his ruling."

Airbnb started to address the city's concerns earlier this year. In April, the company said it was investigating hosts in San Francisco with multiple listings and was booting "unwelcome commercial operators." Since then, the site has pulled down 213 entire-home listings and removed 525 so-called hacker hostels. The company also announced last month that it was automating its site to ensure hosts only list one property.

"No matter what happens in this case, we want to work with the city to fix the broken system long before the legal process runs its course," the Airbnb spokesman said.