San Francisco's city attorney issued a cease-and-desist demand Monday to a mobile app called Monkey Parking, which allows people to auction public parking spaces they're using to other nearby drivers.

In a letter to Paolo Dobrowolny, the CEO of the Italian-based tech startup, city attorney Dennis Herrera cited a provision in San Francisco's police code that prohibits people and companies from buying, selling or leasing public on-street parking and mandates fees of up to $300 for drivers who violate the law.

Herrera's warning to Monkey Parking is the latest attempt by city government officials and state lawmakers nationwide to figure out how to best regulate Web-based businesses that offer shared parking, transportation and housing services using mobile applications. Among the most popular of these apps are car services Uber and Lyft, which have been the subject of litigation and protests by traditional taxi drivers, and popular house-share apps like Airbnb, which has come under close scrutiny in cities like New York, where subletting is heavily regulated.

In San Francisco, where parking is often elusive, the Monkey Parking app allows drivers to get a parking spot and sell it for $5, $10, even $20, and then wait until the buyer arrives to take their place.

Herrera has given its creators until July 11 to shut down operations in San Francisco or face a possible lawsuit under California's Unfair Competition Law. Herrera added that besides the violations, Monkey Parking's app encourages drivers to unsafely use their mobile devices and engage in online parking bidding wars while behind the wheel.

Dobrowolny said in an email Monday that he is talking with his legal staff and didn't immediately have a specific comment about the letter.

"As a general principle, we believe that a new company providing value to people should be regulated and not banned," Dobrowolny wrote. "This applies also to companies like Airbnb, Uber and Lyft that are continuously facing difficulties while delivering something that makes users happy. Regulation is fundamental in driving innovation, while banning is just stopping it."

The city attorney's warning to Monkey Parking comes about a month after his office started investigating the startup, which began its San Francisco operations in April.

"Technology has given rise to many laudable innovations in how we live and work — and Monkey Parking is not one of them. It's illegal, it puts drivers on the hook for $300 fines, and it creates a predatory private market for public parking spaces that San Franciscans will not tolerate," Herrera said in a written statement. "People are free to rent out their own private driveways and garage spaces should they choose to do so. But we will not abide businesses that hold hostage on-street public parking spots for their own private profit."

Herrera's letter to Monkey Parking also asked Apple to immediately remove Monkey Parking from its app store. Apple did not immediately respond to emails seeking comment.

San Francisco's action is part of a broader effort to crack down on some tech startups based on the concept of the sharing economy, which aims use Web technology to bring producers and consumers directly together without traditional oversight mechanisms.

Two other tech companies, Sweetch and ParkModo, which Herrera said also violate city and state law, will receive similar cease-and-desist warnings later this week. Sweetch co-founder Hamza Ouazzani Chahdi, who created the $5-per-parking-spot swapping app, said Monday, "We don't understand why they want to shut us down. We are trying to solve the huge parking problem, which is not only bad for drivers but for all the city.”

ParkModo did not immediately respond to requests for comment.

Al Jazeera and The Associated Press