In June, San Francisco essentially backed Airbnb into a corner, asking the startup to comply with tougher rental legislation or face daily fines. At the time, the company refused to say how it would proceed or whether it would comply.

Twenty days later, we now know what Airbnb's path forward will be.

On Monday, the startup announced in a blog post that it has decided to sue its hometown over the latest regulations, arguing that the city broke federal law and went against its First Amendment rights of freedom of speech.

"This is an unprecedented step for Airbnb, and one we do not take lightly, but we believe it's the best way to protect our community of hosts and guests," the company wrote in its post.

The feud began in early June after San Francisco's Board of Supervisors voted 10-0 to pass tougher legislation that would make short-term rental companies responsible for enforcing some of the city's rental laws. The ordinance was officially passed on June 14, and the mayor enacted it on June 24.