Repealing ‘Section 230’ Portion of Internet Law Would Be Terrible For Airbnb. Here’s Why.
Barron's
Jan 12, 2021
The escalating furor about the role of social media in radicalizing the Far Right supporters of President Trump has shed renewed focus on potential reform of Section 230, the provision of federal law that protects online companies from being sued for content created by third parties on their platforms.
Elimination of Section 230 protections certainly would have ramifications for Twitter (ticker: TWTR), Facebook (FB) and Google’s Alphabet (GOOGL)—but it would also cause disruption for a wide range of Internet businesses that rely on user-generated content.
In a research note on Monday, Gordon Haskett analyst Robert Mollins makes this exact point in regard to Airbnb (ABNB)—and he thinks in the case of the short-term real-estate rental firm the risks are being overlooked.
“Overall, we don’t expect an immediate change to Section 230, but we do believe it should be on investors’ radar in 2021,” he writes. “As the debate around the law intensifies given the events that took place on January 6th.” He points out that President-elect Joe Biden has called for repeal of Section 230. If that happens, he writes, “Airbnb could be held liable for listings on its platform that don’t follow local laws.”
Section 230 is part of the Communications Decency Act of 1996. The specific provision is brief: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” That’s it. There’s no specific mention of social media. In fact, the law was written before Twitter, Facebook or Google were even founded.
Mollins notes that Airbnb called out Section 230 reform as a potential risk in its recent IPO filing. “There is proposed U.S. federal legislation seeking to hold platforms liable for user-generated content, including content related to short-term rentals,” the company said. “We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages.”
As Mollins points out, Airbnb has said that Section 230 allows them to provide user reviews, to moderate content posted by users and to take down discriminatory content. Repeal of 230, he adds, could make the company liable for violating city-specific regulations, inappropriate or derogatory reviews and for misrepresentation of home listings. He notes that there is pending legislation that would make rental platforms liable for certain user activity, like illegal listings.
Mollins does not expect an immediate decision on repealing Section 230, but adds that if it happened, “Airbnb would be exposed to numerous lawsuits around the country in regards to illegal listings.” He maintains an Underperform rating and $103 target price.