(Bloomberg) -- Airbnb Inc. and HomeAway Inc. faced a barrage of questions as they asked a federal appeals court to strike down regulations aimed at cracking down on illegal listings on their sites.

The home-sharing giants encountered skepticism Friday as they urged a three-judge panel of the Ninth Circuit Court of Appeals to rule that a short-term rental ordinance enacted by Santa Monica, a Southern California beach city, violates a federal law that shields online services from liability for the postings of their users.

Key Insights:

  • A win for the companies may serve as a template for other internet-based gig-economy firms to challenge regulations across the U.S, while a loss may embolden regulators to follow Santa Monica’s model
  • Santa Monica fight is representative of widespread tension between Airbnb and cities that are trying to preserve local quality of living standards and protect affordable housing from being converted into quasi-hotels

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Peter Blumberg

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