The platform economy undoubtedly brings advantages, but also generates significant challenges for (local) government. National and local regulators seeking to address such challenges are confronted with limits imposed by EU law, which seemingly grants online platforms a wide degree of freedom to provide their services within the Union’s internal market. This article evaluates the room for national and local authorities to regulate platform-mediated services under the E-Commerce Directive and Services Directive after the “Airbnb cases” (Airbnb Ireland and Cali Apartments). Taking the short-term rental market as a case study, the article concludes that there is in fact considerable room to target both the intermediary services provided by the platforms (upstream), as well as the underlying services (downstream). A combination of upstream and downstream regulation is recommended for local enforcement to be effective, avoid further fragmentation from city to city and halt the trend towards ever-stricter regulation of the underlying services.