Innovators and regulators don’t usually hold hands and smile. More often than not, innovators break through walls and regulators then decide how to react: Do they build a door where the wall was broken, or ask that the wall be rebuilt?

One of the most hotly contested innovation vs. regulation battles is currently being played out in New York City with the peer-to-peer lodging rental site Airbnb.

In the latest development, San Francisco-based Airbnb has said that it will hand over the personal information of 124 individual past and present hosts to the the New York Attorney General Eric Schneiderman, according to a blog post released late last week from David Hantman, the head of global public policy at Airbnb.

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In May, Airbnb released anonymized data on 16,000 New York hosts. No names, apartment numbers, or other personally-identifiable information was included in the first release of information on New York hosts.

Before turning over the data, Airbnb went through its New York community of apartment hosts and removed what are being dubbed “bad actors,” or hosts who were breaking the rules of the community or not providing adequate rental conditions. Airbnb’s Hantman says that the “vast majority” of the 124 hosts that Schneiderman’s office requested information on were no longer active users.

The data handover was not unprecedented. Airbnb was expecting Schneiderman’s office would be following up its request for anonymized data with a request for specific information on individual hosts, Hantman wrote. Hantman also said the attorney general may indeed ask Airbnb for more information on New York hosts in coming months. Airbnb says that those hosts the attorney general is seeking have been “flagrantly misusing” the platform.

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At the heart of the issue is tax revenue. New York State law prohibits landlords from making short-term rentals for less than 30 days when the primary resident is not also present. This “multiple dwelling law,” outlined in the agreement reached between New York and Airbnb back in May, attempts to prevent landlords from becoming unofficial hotel operators. That’s important to municipal coffers because New York City collects taxes on “transient occupancy or tourist use” residences, the letter states.

As Airbnb and the attorney general exchange carefully worded letters and precious data, the San Francisco apartment rental platform has been playing to the heartstrings of Big Apple’s residents. New York City subways have been blanketed with advertisements showing images of smiling, gracious-looking hosts above the tagline, “New Yorkers agree: Airbnb is great for New York City.”

Airbnb certainly hopes New Yorkers agree. The San Francisco startup just pulled in $475 million in funding, according to disclosure documents filed to the Securities and Exchange Commission in late July. That means there are plenty of venture capitalists who are betting on getting a return on their investments.

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