A federal judge has refused to immediately block a San Francisco ordinance that would fine Airbnb for booking rentals that were not registered with the city.
But U.S. District Court Judge James Donato said in his ruling on Tuesday that he still wants to hear additional argument before making a final decision.
Donato rejected some of Airbnb's arguments in favor of a preliminary injunction but said the company may have legitimate concerns about its ability to comply with the ordinance.
San Francisco allows short-term rentals but requires hosts to register with the city and limit the length of stays.
The city says the vast majority of San Francisco listings on Airbnb are unregistered.
Airbnb argued the ordinance would force it to screen and remove listings. An email to the company was not immediately returned.
Supervisor David Campos, who authored the ordinance, released a statement Tuesday, saying all industries have to deal with regulations.
"The truth is while no one in San Francisco's city government wants to see a homegrown company like Airbnb go out of business, it’s our job to protect the housing stock of our citizens," Campos said. "And while San Franciscans appreciate tech and innovation, they also appreciate not being evicted from their homes so landlords can Airbnb."
Campos added that Airnbnb's lawsuit was unfounded and "a bit petty."