By: Khushi Palan
As cities grapple with housing shortages and rising rents, local governments are increasingly cracking down on short-term rental platforms like Airbnb.[1] Recent regulatory regimes in various countries reflect a growing effort to reclaim control over local housing markets.[2] Airbnb, however, is not a conventional hotel chain operating fixed commercial premises.[3] It is a cross-border digital service supplier that intermediates accommodation transactions at scale.[4] This structural distinction raises a deeper question: when municipalities restrict Airbnb’s operations, are they merely regulating housing or are they limiting access to a foreign digital service in ways that implicate international trade law?
City-level restrictions on Airbnb create doctrinal uncertainty under the General Agreement on Trade in Services (GATS), administered by the World Trade Organization (WTO).[5] Under GATS, WTO members undertake binding commitments on market access and national treatment in specified service sectors.[6] GATS Article I covers measures by “members,” which expressly includes subnational governments.[7] A DC registration cap, a Barcelona platform ban, or a Tokyo density restriction is therefore not automatically beyond GATS scrutiny simply because it originates at the local level.[8]
On one reading, restrictions that cap listings, require host registration, or ban platform operations function as numerical limitations on the volume of service transactions a foreign supplier can facilitate.[9] On the other reading, these are straightforward domestic land use and housing measures squarely within the police powers that GATS has always left to national and subnational governments.[10] GATS Article VI preserves the right of members to regulate services for legitimate public policy objectives, and housing affordability is about as legitimate as such objectives come.[11] Under this framing, the restrictions are not directed at Airbnb as a foreign digital service; they are directed at the residential accommodation market as a whole.
The uncertainty is compounded by a mismatch between Airbnb’s business model and GATS’ analytical categories.[12] GATS was designed for firms with identifiable commercial presences and discrete contractual relationships.[13] Airbnb does not own accommodation stock; it intermediates through a digital platform, simultaneously supplying services through Mode 1 (cross-border supply) and Mode 3 (commercial presence).[14] The stakes of this classification question became clear in US – Gambling, the first WTO dispute to examine trade in services delivered over the internet.[15] There, the Appellate Body held that where a member has committed to open its market for a service, it cannot block digital delivery of that service, including through online channels, without violating its trade obligations.[16] A city-level cap on Airbnb listings, or an outright platform ban, could be read in exactly the same way: as a prohibition on the volume of transactions a foreign digital supplier may facilitate, which is precisely what GATS Article XVI forbids.[17]
This ambiguity matters because GATS commitments are sector and mode-specific.[18] Classify Airbnb as a technology intermediary, like an online booking platform, and the applicable trade commitments tend to be broader and more permissive of foreign access.[19] Getting the classification wrong has real consequences in either direction: a city that treats its listing restrictions as a straightforward housing measure may unknowingly expose its national government to a trade law challenge, whereas a platform that designs its compliance program around local licensing rules alone may be operating without a full picture of its legal environment. Whether Airbnb is classified as a technology intermediary or an accommodation services supplier determines which schedules of commitments apply and whether any GATS disciplines are engaged at all.[20]
If municipal restrictions can be characterized as GATS-inconsistent market access limitations, digital platforms may face trade law exposure that most compliance frameworks currently ignore–requiring market-entry assessments to account for host-country trade obligations, not just local housing law.[21] If they are conclusively treated as domestic regulation beyond GATS reach, cities gain broad discretion to reshape local digital accommodation markets without international constraint.
The argument here is not that municipal restrictions clearly violate GATS, nor that they clearly do not. It is that the classification question remains unresolved and that the existing GATS doctrine provides no reliable basis for its resolution. Until WTO dispute settlement or treaty negotiation addresses how GATS disciplines apply to digital accommodation intermediaries, that uncertainty will remain an underappreciated risk in the regulatory landscape.
[1] See Katherine Lagrave & Jessica Puckett, 27 Places That Regulate Airbnbs and Other Short-Term Rentals, Condé Nast Traveler (Oct. 17, 2024), https://www.cntraveler.com/galleries/2016-06-22/places-with-strict-airbnb-laws [https://perma.cc/XJ4U-S5V7].
[2] See, e.g., D.C. Mun. Regs. tit. Requirements for Short Term Rental, § 9901 (2021); Guy Hedgecoe, Spain Clamps Down on Airbnb as Tourism Backlash Returns for Summer, BBC (May 20, 2025), https://www.bbc.com/news/articles/c3wdd8lg581o [https://perma.cc/CEE4-DA7T]. But see Natalie Lung, Airbnb’s NYC Comeback Dashed After Bill Easing Restriction Dies, Bloomberg (Dec. 18, 2025, at 16:15 ET), https://www.bloomberg.com/news/articles/2025-12-18/airbnb-s-nyc-comeback-dashed-after-bill-easing-restrictions-dies [https://perma.cc/Q8FX-JJXT].
[3] See Trevir I. Nath, Airbnb vs. Hotels: What’s the Difference?, Investopedia (Jan. 29, 2022), https://www.investopedia.com/articles/investing/112414/airbnb-brings-sharing-economy-hotels.asp [https://perma.cc/VEZ3-E2G3].
[4] See Clement Salung Petersen, Vibe Garf Ulfbeck & Ole Hansen, Platforms as Private Governance Systems – The Example of Airbnb, 2018/1 Nordic J. Com. L., 38, 39 (2018).
[5] See Lagrave & Puckett, supra note 1. See generally General Agreement on Trade in Services, Apr. 15, 1994, U.N.T.S. [hereinafter GATS] (explaining the rules of international trade).
[6] See GATS, supra note 5, at Art. XVI, XVII.
[7] See GATS, supra note 5, at Art. I (3) (“‘[M]easures by Members’ means measures taken by: central, regional or local governments . . . .”).
[8] See D.C. Mun. Regs., supra note 2; Craig Saueurs, Spain Fines Airbnb €65 Million: Why the Government is Cracking Down on Illegal Rentals, Euro News (Dec. 12, 2025, at 16:31 GMT), https://www.euronews.com/travel/2025/12/15/spain-fines-airbnb-65-million-why-the-government-is-cracking-down-on-illegal-rentals [https://perma.cc/V423-NDLT]; Rebecca Gibbons, Airbnb Laws in Tokyo, Part 1: The Difference Between Minpaku, Ryokan, and Normal Rentals, Tokyo Portfolio (Apr. 24, 2025), https://tokyoportfolio.com/articles/airbnb-laws-in-tokyo-part-1-the-difference-between-minpaku-ryokan-and-normal-rentals/ [https://perma.cc/94MN-9D52].
[9] See Lagrave & Puckett, supra note 1; GATS, supra note 5, at Art. XVI & XIX(2).
[10] See GATS, supra note 5, at Art. VI.
[11] See GATS, supra note 5, at 4 (“Recognizing the right of Members to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet national policy objectives . . . .”).
[12] See Ines Willemyns, GATS Classification of Digital Services- Does the Cloud have a Silver Lining, 53 J. World Trade 59, 63–65 (2019).
[13] See The General Agreement on Trade in Services (GATS): Objectives, Coverage and Disciplines, World Trade Org., https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm [https://perma.cc/V42Q-GFRJ] (last visited Mar. 19, 2026).
[14] See Airbnb, Strategyzer, https://www.strategyzer.com/library/airbnb-business-model [https://perma.cc/WX7C-SM9P] (last visited Mar. 19, 2026); Shin-yi Peng, International Economic Law in the Era of Datafication 77, (2024), https://www.cambridge.org/core/books/international-economic-law-in-the-era-of-datafication/driving-datafication/7CE07D0DF50163427802C26320BC3350 [https://doi.org/10.1017/9781009355025.005]; Amar Breckenridge, GATS: The WTO’s Framework for Services Trade, Trade Knowledge Exch., https://www.trade-knowledge.net/knowledge/gats-the-wtos-framework-for-services-trade/ [https://perma.cc/Q62S-UW63] (last visited Mar. 19, 2026).
[15] See Rep. of the App. Body, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶¶ 214 – 222, Doc. WT/DS285/AB/R (Apr. 7, 2005).
[16] See id. at ¶ 215.
[17] See id.
[18] See Breckenridge, supra note 14.
[19] See Comput. & Related Servs., World Trade Org., https://www.wto.org/english/tratop_e/serv_e/computer_e/computer_e.htm [https://perma.cc/HQC2-6AUS] (last visited Mar. 23, 2026) (“[CRS] is also one of the sectors where cross-border supply (mode 1) has more commitments than in other service sectors, with few, if any, limitations.”).
[20] See Peng, supra note 14; see also Sam Fleuter, The Role of Digital Products Under the WTO: A New Framework for GATT and GATS Classification, 17 Chi. J. Int’l L. 153, 155 (2016) (arguing that digital products should be treated as services under WTO law).
[21] See Fleuter, supra note 20.
