The Technology 202: Airbnb and Doordash may go public this week, with major regulatory risks

Airbnb and Doordash are part of a generation of companies that were initially seen as rule-breakers, asking for forgiveness rather than permission as they upended traditional hotel, transportation and food delivery businesses. Now they’re poised to be among some of the most in-demand tech stocks in the United States — even though they still operate in areas with high risk for tougher regulation that could curtail their business. 

Cities, states and federal governments around the world are still in many instances writing the laws that govern both areas of business. The rules for short-term rentals can vary dramatically from city to city in the United States. And the recent battle over classifying gig economy drivers as employees in California highlights that the employment models that have fueled the rise of Uber, Lyft and a slate of food and grocery businesses are still hotly contested. 

Both companies also have new unique risks brought on by the coronavirus pandemic, which could have long-term effects on travel and how people use on-demand delivery services. 

Here are the risk factors these companies are warning investors about ahead of their IPOs later this week:

Airbnb has become a household name in the last decade, and as one of the most highly valued private startups in Silicon Valley, its IPO is perhaps the most highly anticipated of the year. The company’s scale is massive — it operates in more than 220 countries in approximately 100,000 different cities. 

But that means the company is dealing with a wide range of housing and tourism laws that are constantly changing. It’s so broad that Airbnb warns it may not be possible for it to investigate or evaluate laws or regulations in all the cities or countries in which it operates.

The company warns in its filing that it’s likely to continue to become involved in disputes with government agencies regarding laws governing the short-term rental market. It also told investors that these ever-changing regulations could make it more difficult down the line to find hosts willing to rent out their properties. 

“Laws, regulations, and rules that affect the short-term rental and home sharing business may limit the ability or willingness of hosts to share their spaces over our platform and expose our hosts or us to significant penalties, which could have a material adverse effect on our business, results of operations, and financial condition,” the company warned. 

Short-term, Airbnb faces major risks related to government orders dictating how people travel during the pandemic. Already the company has had major blowback from both guests and hosts for its handling of refunds related to coronavirus cancellations earlier this year. 

The company faces the same regulatory risks as many gig economy workers, which currently classify their drivers as contractors. That model has been highly controversial, because although it offers workers broad flexibility over their schedules, they do not get basic benefits such as health care and paid time off from their employer. 

Recently companies had a major win in California, where they successfully passed a ballot proposition that would ensure drivers would continue to be classified as contractors. But they do have to make some benefit concessions, including giving drivers a minimum wage guarantee based on “engaged time” when a driver is fulfilling a ride or delivery request, but not the time they spend waiting for a gig. Gig companies are expected to try to expand this model throughout the United States, but it’s very likely they could face opposition from Democrats. 

Doordash warns that any changes to how its drivers are classified could result in major costs related to claims for employee benefits and wage withholding. 

“A reclassification of Dashers or other delivery service providers as employees would require us to significantly alter our existing business model and operations and impact our ability to add and retain Dashers to our platform and grow our business, which we would expect to have an adverse effect on our business, financial condition, and results of operations,” the company said. 

The company joins Charter Communications, LTD Broadband and the Rural Electric Cooperative Consortium in receiving some of the $9.2 billion in new funding to launch satellites to bring Internet service to remote or rural Americans, Christian Davenport reports. 

The program is expected to benefit “millions of unconnected rural Americans who for too long have been on the wrong side of the digital divide,” FCC Chairman Ajit Pai said in a statement. 

The announcement comes as Democrats push for funding to provide relief to Americans who haven’t been able to access the Internet during the pandemic because of cost or availability. President-elect Joe Biden endorsed a relief bill that would include $4 billion in relief toward fixing the digital divide. 

The funding could also give SpaceX a lead in the race against rivals Amazon and OneWeb to build Internet in space, Christian notes. (Amazon CEO Jeff Bezos owns The Post.)

SpaceX has launched 1,000 Internet satellites and has government approval to launch 12,000 more. The company aims to expand its Internet service, which is in a pilot program, by 2021. 

The company’s offloading of self-driving division to start-up Aurora marks a dramatic shift for the company, Faiz Siddiqui reports. As recently as its 2019 IPO filing, Uber executives toward an automated fleet of vehicles as a way of boosting company profitability.

But the project also introduced serious risks for the company. The project National Transportation Safety Board investigated the involvement of one of its vehicles in the first known pedestrian death from a self-driving vehicle in 2018. 

The sale to Aurora positions the start-up as a leader in the driverless vehicle industry.

“With the addition of [Advanced Technologies Group] Aurora will have an incredibly strong team and technology, a clear path to several markets, and the resources to deliver,” Chris Urmson, co-founder and CEO of Aurora, said in a statement. “Simply put, Aurora will be the company best positioned to deliver the self-driving products necessary to make transportation and logistics safer, more accessible, and less expensive.”

Aurora plans to offer employment to most of ATG’s employees, which total more than a thousand, Faiz reports.

Uber is also reportedly considering selling its air taxi business, another sign that the company is consolidating aspects of its ride-hail business to focus on food delivery. The company acquired rival Postmates this summer.

The three-year deal will enable the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research and the Oncology Center of Excellence to access Palantir software for data analysis, Lizette Chapman at Bloomberg News reports. The agency also will use the software to approve drugs.  

Palantir was awarded a contract with the Department of Health and Human Services this spring to help with covid-19 response. The company also had a contract with the Department of Homeland Security, and its work with Immigration and Customs Enforcement has attracted scrutiny from human rights advocates.

• The Center for Democracy and Technology will hold “The Future of Speech Online 2020” through Friday.
• The ACLU and Center for Democracy and Technology will join a panel hosted by Community Oversight of Surveillance – DC on December 9 at 6pm
• Stanford’s Freeman Spogli Institute for International Studies will host an event “Digital Technology, Socia Media and the 2020 President Election” Thursday at 9am