Platforms as Private Governance Systems – The Example of Airbnb

Online platforms create legal systems that can best be described as private governance systems. By private governance we refer to the fact that a private actor can take on the roles as regulator, implementer and dispute resolution body, thereby mirroring the classical roles of the state and potentially replacing state governance with an alternative, private legal order. As an example, the Airbnb platform (www.airbnb.com) regulates the rights and duties between users of the platform (hosts and guests), it implements these rights and duties by facilitating supervision mechanisms such as ratings and reviews, and it provides dispute resolution mechanisms for the users. The increasing societal role and impact of online platforms makes it pertinent to consider to what extent these private governance systems can safeguard the public values and interests which state legal orders seek to promote and protect. In this article, we use the concept of private governance to make a case study of the private legal order of Airbnb. Our analysis shows that the private governance system created by Airbnb is concerned not only with commercial matters, but also with public values as known in state legal orders. However, it also shows that the private governance system created by Airbnb can have an undermining effect on state legal orders.