December 14, 2018 | Policy Brief

Illinois Moves to Blacklist Airbnb

December 14, 2018 | Policy Brief

Illinois Moves to Blacklist Airbnb

Following a request by Governor Bruce Rauner, the Illinois Investment Policy Board (IIPB) on Wednesday unanimously voted to notify Airbnb, the online accommodations firm, that it is violating state law prohibiting the boycott of Israel. The Illinois action demonstrates the material risk facing companies that acquiesce to boycott pressure.

The IIPB decision came in response to Airbnb’s announcement on November 19 that it would “remove listings in Israeli settlements in the occupied West Bank.” Airbnb’s statement preceded by one day the release of a lengthy Human Rights Watch (HRW) report examining Airbnb and Booking.com’s listings in the West Bank. HRW sent letters of warning to both companies, but only Airbnb decided to remove its Jewish-owned West Bank listings. Airbnb has been the target of a campaign waged since early 2016 to remove its Jewish West Bank listings.

Airbnb’s decision has led to charges of discrimination since the company continues to allow listings in numerous disputed territories, such as the Hamas-run Gaza Strip, Northern Cyprus, Tibet, and Western Sahara. The firm does not operate in Crimea, Syria, Iran, or North Korea, although these are territories where U.S. sanctions would present substantial legal and financial difficulties for the company.

Several Jewish groups condemned Airbnb’s decision. The Anti-Defamation League (ADL), an organization dedicated to fighting anti-Semitism, sent a letter to Airbnb’s CEO registering its dismay at the company’s capitulation to the Boycott, Divestment, and Sanctions (BDS) movement. The ADL also criticized Airbnb’s opaque process for arriving at this decision. The Simon Wiesenthal Center, another organization fighting anti-Semitism, urged a boycott of the online accommodations firm. Additionally, Honest Reporting, a media watchdog, filed a complaint with the Office of Anti-Boycott Compliance, a subdivision of the U.S. Department of the Treasury dedicated to combatting boycotts of Israel, to determine if Airbnb violated federal law.

Elected officials have also condemned Airbnb. Vice President Mike Pence noted the Airbnb move before stating his opposition to BDS. Florida’s Governor-elect Ron DeSantis said he was assessing whether Airbnb’s move violated Florida state law. So far, Illinois Governor Bruce Rauner’s request to the IIPB to determine if Airbnb broke state law has been the most consequential action. Airbnb will be added to Illinois’ list of prohibited investments in 90 days if it does not respond. However, Airbnb will likely join the list even if it does respond, since it does not deny its actions, but rather disputes the significance of those actions.

Illinois prohibits any state funds, including pension funds, from investing in a list of companies banned for investing in Iran and Sudan, or for boycotting Israel. The state’s pension funds provide for more than one million government workers and retirees. If Airbnb were added to the list of prohibited investments, Illinois’ pension funds – valued at approximately $90 billion – could not make direct investments in Airbnb and would notify portfolio managers to avoid indirect investments as well.

None of this currently affects Airbnb as it is not a publicly traded company. However, there are reports that Airbnb will make its initial public offering (IPO) sometime next year, which would expose it immediately to anti-boycott measures. Just last month, Airbnb hired a former Amazon executive to be its chief financial officer, lending credence to expectations of an IPO.

Companies under pressure from BDS activists should recognize that following the movement’s advice might result in legal and financial consequences as well as reputational damage. The BDS movement promotes a double standard that targets Israeli and Jewish interests, while ignoring grave human rights violations by Hamas and others. Lawmakers in all 50 states should consider appropriate remedies for such discrimination.

David May is a research analyst at the Foundation for Defense of Democracies. Follow him on Twitter @DavidSamuelMayFollow FDD on Twitter @FDD. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.

Issues:

Palestinian Politics