Startup Policy Digest: 12/18/2015

Our weekly take on some of the biggest stories in startup and tech policy. 

CISA Sneaks into Omnibus. As Congress scrambled to clear its legislative calendar before leaving DC for the year, it packed a bunch of unrelated bills together into a 2,000 page omnibus spending bill that will need to pass in order to adequately fund the government. This potpourri approach to legislation raises serious concerns about government transparency and access, as all but the most well-connected groups are effectively blocked from the closed-door dealmaking that resulted in the omnibus. This year’s omnibus produced one notably terrible outcome: the resurrection of the much-maligned Cyber Intelligence Sharing Act (CISA), which is meant to allow companies to share information on cyber attacks with government in order to help prevent future hacks. Critics argue that the bill creates more problems than it solves by jeopardizing user privacy, incentivizing companies to secretly monitor user activity, and allowing the government to obtain consumer data without a warrant. With the ECJ’s nullification of the EU/U.S. data transfer safe harbor so fresh in policymakers’ minds, it is a particularly inopportune time to pass a bill that many believe is effectively an expansion of government surveillance authority.

EU Sets New Data Privacy Rules. On Tuesday, the European Parliament and Council effectively agreed upon a negotiated version of the EU Data Protection Reform originally drafted in 2012. The measures will be formally adopted in early 2016 and go into effect in 2018. US businesses are concerned with several of the law’s provisions that make compliance challenging and also expensive. Among their concerns: Companies that violate the rules could face fines of up to 4 percent of global sales; the law also formalizes the “right to be forgotten” statute, allowing users to not only correct inaccurate personal data, but also the right to remove irrelevant or outdated information; the age of consent for data processing is set at 16 years; companies must alert authorities within three days of a reported data breach; and larger “data-processing” companies must designate a data protection officer.

An Uber Union? Seattle has become the first city in the nation to allow on-demand drivers for companies like Uber and Lyft to unionize. The legislation, passed by Seattle’s city council on Monday, is seen as a test case for the changing 21st century workforce and will likely be contested in court. While some have argued that the new policy conflicts with federal law and raises antitrust concerns, others insist that the local law has teeth. Regardless of its merits, the law further complicates the broader debate around worker classification in the emerging “gig economy” and whether policies can support both innovation and workers.

California’s New Self-Driving Car Laws. A month after a study by California’s Department of Motor Vehicles, the state released proposed rules for driverless cars. Some of the rules came as no surprise to driverless car manufacturers such as Google, Tesla, and Ford: consumers must receive special training certificates and the autonomous vehicles must meet certain cybersecurity standards. However, one proposal, if passed, could significantly impede innovations in this emerging industry. The California DMV wants a licensed driver present in the vehicle, preventing the kinds of functions—package-delivering vehicles or transportation for the blind—that could truly revolutionize transit. This rule also complicates the liability question by making the licensed driver legally on the hook for any accidents. Google, on the other hand, has thus far stated that it is willing to take responsibility for any accidents on the road. There’s still room for debate though; these rules open for public comment next month.

BingeOn? Maybe Not Says FCC. In its net neutrality rules from earlier this year, the FCC declined to enact a flat ban on “zero rating” programs whereby ISPs exempt certain data from user data caps. Instead the FCC decided to tackle such issues on a case-by-case basis. Since then, ISPs have begun to test the FCC’s willingness to regulate data exemption policies, such as T-Mobile’s Music Freedom and BingeOn plans. While T-Mobile’s programs do not implicate the most concerning net neutrality problems by allowing any music or video streaming company to take advantage of the data exemption without payment, some net neutrality advocates have taken aim at T-Mobile’s policy of throttling all video traffic regardless of whether it is a part of the BingeOn program. FCC Chairman Tom Wheeler has previously applauded T-Mobile’s programs as creative, pro-consumer innovations, but now, the FCC wants to take a closer look. With the Commission’s data cap inquiry and the DC Circuit’s pending decision on the validity of the FCC’s net neutrality, 2016 looks to be an important year for the future of the open Internet.

Drone Registration Goes Live. The Federal Aviation Administration unveiled new recreational drone requirements this week. Starting December 21, drone hobbyists must register their unmanned aircrafts and pay a $5 fee through a new FAA web page. The registration requirements represent a mostly uncontroversial attempt to maintain safety and accountability in national airspace as more and more drones populate the skies.

GOP Misses on Tech Issues. While many observers called this week’s Republican debate the most “substantive” yet, tech experts heard uninformed positions and misconstrued information on issues such as surveillance, the operation of the Internet, and encryption. For instance, Gov. Kasich inaccurately assumed that encryption prevented law enforcement from collecting information that could have foiled the San Bernardino shootings. Yet, whether encryption played any role in law enforcement’s access to important digital communications has not been confirmed. Meanwhile, Mr. Trump suggested that parts of the Internet should be “closed,” a preposterous suggestion that would not only hinder communication amongst bad guys, but also the good guys who drive ambulances, operate hospitals, and alert the world to vital information. Such superficial positions on high-impact tech policy are disconcerting - legislating these areas will require thoughtful (and, frankly, more complicated) solutions.

Prisoners Turned Coders. San Quentin State Prison just graduated 21 inmates from its tech incubator, which teaches inmates to code as well as the skills it takes to design and pitch a business to investors and peers. The program,  made possible by The Last Mile organization, has become so popular that inmates are requesting transfers to San Quentin. Next up: A new program from The Last Mile will provide inmates with paid coding jobs for businesses outside prison walls.

2016 Candidates: What About Tech?

Since the 2016 presidential contenders declared their candidacies and more recently, garnered increasing attention from national media and the electorate, we’ve been listening closely to what they have to say about technology. From where we stand, there’s a lot at stake: the Labor Department expects over 1.3 million job openings in the industry by 2020, cybersecurity and privacy challenges continue to make headlines, and technology itself is only becoming more ubiquitous. That’s not to mention that many of the startups navigating these challenges are an invaluable part of the national economy: new firms are responsible for all net new job growth in the United States. Yet, aside from some vague musings about the gig economy, general statements about immigration reform, and outlandish ideas about the Internet, we haven’t heard much, at least much of substance.

As Engine’s Executive Director, Julie Samuels, explained in TechCrunch, candidates have thus far evaded questions on many of the issues that matter most to technology entrepreneurs and industry leaders, because “many of these tough issues split our traditional notions of the two-party system.” They also don’t have easy solutions.

In an effort to highlight some of these issues, Engine teamed up with the Technology Association of Iowa to host a forum on December 7 in Cedar Rapids. Iowa is not only the first state to hold primary elections, making it a popular destination for campaigns this time of the year, but it’s also home to a vibrant and growing technology and startup community. The tech industry is one of the fastest growing job sectors in the state and accounts for 8.8% of Iowa’s GDP.

The program started off with a panel discussion among Julie Samuels and local tech entrepreneurs to address why policy matters to this community in Iowa and all over the country. Eric Engelmann, founder of the Iowa Startup Accelerator, spoke about the importance of capital access to entrepreneurs building companies outside Silicon Valley. Helen Adeosun, CEO and co-founder of Care Academy, discussed the great need for industry diversity, and Bruce Lehrman, CEO of a Cedar Rapids-based data center company, noted the urgent challenge of finding technically trained workers.

We were later joined by 2016 candidates Gov. Martin O’Malley and Carly Fiorina who shared their own views on the talent shortage and access to capital, among other issues. As the Cedar Rapids Gazette reported, the candidates agreed that education is “vital to innovation” but, not surprisingly, disagreed on the federal government's role. O’Malley’s address focused on his track record as governor of Maryland; under his administration the state was rated number one for innovation and entrepreneurship by the U.S. Chamber of Commerce and expanded STEM education offerings in Maryland schools. When pushed on his specific policy prescriptions for supporting innovation and the country’s entrepreneurs, however, his answers were less direct.

Fiorina took a different approach in her address, strongly condemning the recent attacks in Paris and San Bernadino before turning to the role of technology “as a tool and a weapon” in national security and cybersecurity efforts. “Having led the world’s largest technology company, I know what it will take for America to lead in this realm,” she added. When Engelmann asked about whether she’d repeal the Affordable Care Act, which he said allowed entrepreneurs to start their own ventures, she affirmed she would, arguing the free market could better provide healthcare solutions. And in response to how she’d support more women entrepreneurs, Fiorina underscored the layers of the bureaucracy that slow down all new business owners.

This week’s forum offered us a glimpse on where at least two candidates stand on a handful of these important issues. As we look to 2016, we hope to hear a lot more.

Tech Meets Politics in Cedar Rapids

This afternoon, Engine, in partnership with the Technology Association of Iowa, is hosting the first ever Presidential Tech Town Hall. We’ve invited presidential candidates to address over 200 entrepreneurs, technology leaders, and caucus-goers in Cedar Rapids. Former HP CEO Carly Fiorina and Gov. Martin O’Malley will join us to share their platforms for supporting technology innovation and entrepreneurship.

Iowa is not only the first state to hold primary elections on February 1, but it’s also home to a vibrant technology and startup community. Major industry leaders including Google, Facebook, IBM, and Microsoft all have offices in Iowa. Norand Corp, now part of Intermec in Cedar Rapids, developed the core technology for Wi-Fi. Entrepreneurs in Des Moines, Iowa City, and Cedar Rapids are also building new startups every day.

What will the presidential contenders have to say to these tech-savvy and entrepreneurial-minded caucus-goers? You can join the conversation on Twitter at #IowaTech2016 and follow along by watching the livestream starting at 4pm CT at www.TheGazette.com.

Candidates Need To Address The Tech Industry In The 2016 Election

This piece was originally published in TechCrunch.

Despite the unprecedented growth of the tech sector, none of the 2016 presidential candidates has really stood out when it comes to technology and entrepreneurship policy.

Given the importance of many of the issues that the startup community faces, this is really unfortunate. But not necessarily surprising. Let’s start with the data:

• New firms – startups – are responsible for net new job growth in the United States.

• Each new tech job is responsible for 4.3 local non-tech jobs.

• High-tech startups, and their attendant job creation, exist all over the country.

All of which is to say, this community is of vital importance to our national economy. And it faces real problems that the next president will have to address. So where are the candidates?

For starters, many of these tough issues split our traditional notions of the two-party system. Take for instance the gig economy, which has pitted traditional unions against many newer tech firms. Or cybersecurity, which seemingly puts privacy advocates, law enforcement, and tech companies at odds.

And that’s not to mention the very real lack of diversity in this industry, which continues to be a serious problem without a real and promising solution in sight.

Even though allowing for more high-skilled immigration reform or doing a better job at educating American youth in STEM fields actually does have the potential to unlock scores of diverse talent for American companies, there has been little appetite in D.C. to do anything about it.

It’s true; none of these issues has an easy answer. They are hard problems that need real solutions. Many of those solutions will require bucking traditional political supporters (not to mention funders). Policymakers will have to make tough – and sometimes, unpopular – calls.

It’s only going to get harder as every company transitions to becoming a tech company, or at least a company that increasingly relies on technology.

We’ve already seen that start to happen, as traditional retailers have online stores, coffee shops and hotels provide Internet access, and banks implement online banking services. And that’s not to mention how much of people’s personal and social lives have moved online.

These issues will affect every aspect of our society and economy and more stakeholders will be at the table, demanding answers.

So you can understand why the candidates have attempted to evade these questions so far. But we should not let them do that anymore.

Election season presents an important opportunity to push candidates to go on the record, which may prove valuable for years to come.

Take then-candidate Obama, who in 2007 promised he would support net neutrality, saying unequivocally: “I am a strong supporter of Net neutrality.”

Fast forward to 2015, when President Obama followed through on that promise, strongly and publicly signalling his support for net neutrality in a moment now largely considered to be one of the most crucial in the leadup to the FCC’s historic action.

It’s not all up to the candidates, of course. This community of entrepreneurs must do its job, too. We must  remind the candidates that our community – which was largely responsible for stopping SOPA and for sending 4 million comments to the FCC in support of net neutrality – is listening for answers. And voting.

Startup News Digest 9/25/15

Our weekly take on some of the biggest stories in startup and tech policy:

Startups Defend Net Neutrality Order. The FCC is facing ongoing litigation in the DC Circuit Court of Appeals over the net neutrality rules it passed earlier this year, and on Monday, the court received briefs from a variety of companies and organizations supporting the FCC’s rules. Engine filed a brief along with a group of innovative startups that included Dwolla, Fandor, Foursquare, General Assembly, GitHub, Imgur, Keen IO, Mapbox, and Shapeways. We argue that the FCC’s decision to reclassify broadband as a telecommunications service was necessary to preserve the continued growth of the startup sector, which has in turn driven consumer demand for broadband and incentivized companies to invest in their networks. The court will hear oral arguments in the case on December 4 and will likely render its decision sometime next year.

SEC To Finalize Crowdfunding Rules. Sources at the Securities and Exchange Commission have told Politico the agency is likely to finalize long-awaited crowdfunding rules in late October or early November. SEC rulemaking will put Title III of the JOBS Act into effect, which could radically expand capital access for startups—though the statute does contain some burdensome requirements for companies. While the startup community will be excited to see any action from the SEC in light of an extended delay, we need to ensure that whatever regulatory regime the SEC adopts is well-calibrated and accessible to the small, emerging companies that could most benefit from new sources of capital.

Bush Campaigns Against Open Internet. Most of the Republican candidates in the 2016 presidential race have come to realize that an overwhelming majority of the public supports net neutrality rules (including 81% of Republicans) and have refrained from loudly criticising the FCC’s Open Internet Order. But this week, Former Governor Jeb Bush expressed his opposition to net neutrality (a policy he onced called “one of the craziest ideas [he’s] ever heard”), arguing that preventing ISPs from abusing their gatekeeper power does nothing to enhance consumer welfare. Bush’s comments run counter to both the FCC and the conservative DC Circuit Court of Appeals, which have recognized that net neutrality rules and foster the growth of the edge providers and promotes investment in broadband networks, resulting in better and more affordable service for consumers. It’s a reminder that startups, consumers, and everyone else who benefits from the open Internet should keep a close eye on this presidential race. 

Administration Taking Steps to Promote High-Speed Broadband Access. On Monday, the Broadband Opportunity Council published its first report, which includes 36 actions that federal agencies will take to encourage broadband deployment.  These actions require no new funding, “but existing sources of funding are being opened up and barriers to deployment are being brought down.”  Of particular note is that the White House refers to broadband as a “core utility,” like electricity or water. We tend to agree - broadband is no longer a luxury. Connectivity is core to innovation and the ability of startups to reach customers and scale, and we are pleased to see the Administration taking these steps to bring access to underserved populations and areas of the country.  

White House Considers Encryption. Thanks to some leaked documents from the White House, it’s rumored that President Obama may come out in opposition to a law that would require firms be able to unlock their customer’s encrypted smartphones and applications. Up to this point, law enforcement has argued the need for backdoors to encryption to ensure national security and safety. This sort of advocacy from the White House would help repair global trust in the US government, countering the narrative in Europe that the US is trying to expand its surveillance activities. Meanwhile, the American Civil Liberties Union (ACLU) and other privacy advocates continue to push the importance of US government’s use of encryption to promote both personal privacy and national security.

“Facebook giveth and Facebook taketh away.”  The Wall Street Journal reported this week that dozens of startups have “shut down, been acquired or overhauled their business” as a result of Facebook’s new policies limiting outsider access to some of its users’ date. Facebook’s rules, which went into place in May, restrict what data can be used by third parties like startups, academics, politicians or organizations.  Other social media giants like LinkedIn and Twitter have enacted similar policies, signaling to the startup world that if you are building a product or service that relies on data from social media sites, that data may not always be available...

ECJ Advisor Deals Blow to U.S. Tech Companies.  In other data related news, a European Court of Justice (ECJ) advisor issued an opinion this week that the “safe harbour” agreement allowing for data transfers between the EU and the U.S. is “invalid” due to growing concerns around U.S. surveillance practices.  While the lawyer’s opinion is not legally binding, if cemented by a formal ruling it would create a headache for U.S. tech companies who could face data localization requirements in any EU countries.

Women Tech Leaders. Fortune profiles some of the powerful female talent Google has been able to attract at the executive level, including Ruth Porat, a recent addition who has led the transition from Google to Alphabet. Many of these executives after building their experience at Google have left to grow smaller tech companies. Meanwhile, Mary Lou Jepsen of Facebook has a different take: she sees many senior women leaving because they feel isolated by the tech industry.

Startup News Digest 9/18/15

Our weekly take on some of the biggest stories in startup and tech policy.

Tech and 2016. In case you missed it, check out Julie talking about tech and the 2016 election on KCRW’s Press Play with Madeleine Brand.

FCC Opens Up Business Broadband Data to New Eyes. On Thursday, the Federal Communications Commission (FCC) announced that it will release data on the little-understood special access market. While most consumers have never heard of special access lines, you probably unknowingly use them every day. They are the high capacity business broadband lines that allow ATMs to connect directly to your bank or cell phone towers to connect back to the network. Competition in this industry is sorely lacking, with just two providers covering most of the U.S. and jacking up prices for the startups, universities, hospitals, and other businesses that use them. While the data will only be accessible to analysts approved by the FCC, its release represents a step in the right direction towards more transparency, increased competition, and lower broadband prices.

Senate Committee Considers ECPA Updates. The Senate Judiciary Committee held a hearing on reforming the Electronic Communications Privacy Act (ECPA) on Wednesday morning. As we’ve covered in past digests, it's still legal for law enforcement to access your emails and other digital data without a warrant. Last week, the California legislature passed a bill to modernize these outdated digital privacy laws at the state level. Still, a federal overhaul of ECPA would be an even better fix, bringing these laws out of the digital dark ages.  Sens. Lee (R-UT) and Leahy (D-VT) have proposed a bill in the Senate, and there is similar legislation in the House. We’ll be tracking reform efforts.  

Dancing Baby Wins Victory For Copyright Fairness. The courts ruled this week in Lenz v. Universal, the famous “dancing baby” case. As Evan writes, “The Lenz ruling is important for a few reasons. First, it should make it much harder for content owners to abuse the takedown process. […] Second, the decision should serve as a loud reminder that the tech world needs to get to work rebalancing our copyright laws to ensure that they’re actually promoting creativity and expression.”  Read the whole post here.

$81M for CS in NYC. On Wednesday, New York City Mayor Bill de Blasio announced an $81 million public private partnership to make computer science education available to every student in city public schools by 2025. Substantial contributions have come from the Wilson family foundation, the AOL Charitable Foundation, and the Robin Hood Foundation. New York joins Chicago and San Francisco in terms of large cities that have made similar commitments, and we hope to see other cities, states, and the federal government continue to build on such efforts to prepare students for jobs in the growing innovation economy.

The Fight Is On Over Chicago’s Streaming Tax.  A group of Chicago residents have sued the city over its controversial application of the 9% Amusement Tax to online streaming services like Netflix, Hulu, and Spotify.  The Amusement Tax, which applies to events like concerts and sporting games, has been in existence for a while, but was only recently expanded to cover streaming services. And Chicagoans’ bills are already increasing.  As Ars Technica reports, one reader’s Spotify bill went from $7.99 to $8.71 this month. We’ll be watching, as the outcome of this case could have a national impact on the power of cities and states to tax the internet economy.

“Cool clock, Ahmed”. When a Texas middle-schooler’s homemade invention was mistaken for a bomb this week, prompting an outlandish response by his school and local law enforcement, it caught the tech world’s - and the President’s - attention. As a New Yorker writer points out, “His arrest comes at a moment when some of the world’s most influential people...have argued that there aren’t enough U.S. students gaining the math and science skills that will get them jobs in the tech sector."

A Different Kind of Tech Event. We were impressed and encouraged by the conversation at last week’s Tech Inclusion conference in San Francisco, which brought together leaders in Silicon Valley and the national tech community to discuss the challenge of making the tech industry more diverse. Read our take on why this wasn’t your typical tech event and what we took away.