The Big Story: After attack on U.S. Capitol, Internet companies move to block Trump. Content moderation efforts at the world’s largest Internet companies were under the microscope this week as Facebook, Twitter, and YouTube took action against content shared by outgoing President Donald Trump that led to a violent riot at the Capitol that left five dead, including a U.S. Capitol Police officer.
The companies have been under pressure for weeks to limit access to or entirely remove Trump’s accounts as he spread conspiracy theories challenging the integrity of the 2020 presidential election. At the same time, Trump and his congressional Republican allies have for years falsely accused the companies of censoring conservative viewpoints and threatened them with legislative, regulatory, and legal action in what many have called attempts to “work the refs.” In the aftermath of the riot at the Capitol—which was aimed at disrupting Congress as it performed the formality of counting electoral college votes—Facebook, Twitter, and YouTube all removed a video from the president that called the rioters “very special,” and Twitter and Facebook both suspended the president’s accounts. Facebook CEO Mark Zuckerberg announced yesterday that the block on the president’s Facebook and Instagram accounts will continue through the inauguration of President-elect Joe Biden, saying that “the risks of allowing the President to continue to use our service during this period are simply too great.” Trump regained access to his Twitter account after he deleted the offending posts.
But even as the riot pushed large social media companies to take more drastic actions in response to the president’s posts, much of the misinformation, hate, and planning that spurred the attack on the U.S. Capitol occurred in other corners of the Internet. Many of those rioting in support of the president—including adherents of the fringe QAnon conspiracy—relied on private online groups, pro-Trump message boards, and other services to spread information fueling the hateful extremism and even coordinate logistics ahead of the attack.
Republican policymakers, including President Trump, spent much of the last few months and weeks attacking social media companies for allegedly censoring conservative voices as well as attacking Section 230, which provides Internet companies of all sizes with the critical liability limitations needed to host and moderate user-generated content. Policymakers should be wary of calls to repeal or reform Section 230 in ways that pressure companies into hosting more problematic content—especially when the calls come from those who helped spread the misinformation and rhetoric that led to this week’s violence. Instead, they should focus on finding ways to incentivize responsible moderation while recognizing the realities and difficulties of content moderation, especially for startups.
Policy Roundup:
FCC won’t move forward with Section 230 petition. Federal Communications Commission Chairman Ajit Pai said in an interview this week that he will not move forward with the Trump administration’s petition to review Section 230 because “there's simply not sufficient time” to complete the process. President Trump issued an executive order on “preventing online censorship” last May that directed federal agencies, including the FCC, to examine Section 230’s liability limitations.
DHS releases final rule changing H-1B visa lottery program. The Department of Homeland Security (DHS) published a final rule today that would change next year’s H-1B visa lottery program by prioritizing petitions with the highest salary levels. Startups and entrepreneurs have long expressed concern that efforts to undermine the H-1B visa program will decrease U.S. innovation by driving high-skilled, foreign-born workers to other countries. As Engine noted in comments to DHS last month, further restricting the H-1B visa program “would not have the intended effects of boosting American jobs and workers” and “risks preventing a number of highly-skilled professionals” from bringing their talents to the United States.
White House extends restrictions on visas for foreign workers. President Trump extended restrictions on legal immigration and the issuance of new non-immigrant visas—including the H-1B visa program for high-skilled workers—through March 31, more than two months after he will leave office. Trump issued a proclamation last year suspending the issuance of visas to high-skilled foreign workers, claiming at the time that the restrictions were needed to preserve U.S. jobs amid the coronavirus pandemic. As we previously noted, however, the tech sector and startup ecosystem rely upon the contributions of high-skilled foreign talent to drive innovation and economic growth, and the administration’s efforts to curtail visa programs and legal immigration will only drive qualified talent to other countries.
USTR attacks digital services taxes but holds off on imposing tariffs. The Office of the U.S. Trade Representative (USTR) announced this week that digital services taxes (DSTs) imposed by India, Italy and Turkey are inconsistent with global tax principles and discriminate against U.S. companies. While several countries have implemented their own DSTs, some countries that have proposed similar digital levies have refrained from implementing them in order to give the Organisation for Economic Co-operation and Development (OECD) time to reach a global deal. While most of the considered or implemented DSTs target large, mostly U.S.-based tech companies, startups are concerned that the burden of additional taxes will be passed on to them and to their users in the form of increased costs for products and services.
DOL rule clarifies independent contractors’ status. The U.S. Department of Labor (DOL) released a final rule this week to clarify the process for classifying workers as independent contractors or employees. The new rules, set to go into effect on March 8th, focus on two “core factors” that are most central when distinguishing employees from independent contractors, and include additional “guideposts” to help determine a workers’ status. As we noted in comments to DOL last year, efforts to distinguish between an employee and an independent contractor need to consider the realities of launching a startup, since “the ability to hire independent contractors to meet a startup’s skills and talent needs is critically important.”
New FinCEN regulations would require exchanges to collect info on private wallets. Recently proposed regulations from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) would require banks and other financial services to record and verify personal information from U.S. customers and counterparties looking to transfer cryptocurrencies from exchanges to private wallets. Banks and so-called money service businesses would be required to receive detailed personal information from users and counterparties involved in transactions of more than $10,000 in one day, over $10,000 in a reporting period, or who want to make unhosted wallet transactions of more than $3,000.
Final panel on the Nuts and Bolts of Content Moderation. Join Engine and the Charles Koch Institute next Thursday, January 14th at 1 p.m. for the final event in our Nuts and Bolts of Content Moderation series to discuss the role, the realities, and the risks of technology in content moderation. You can RSVP here.
Startup Roundup:
#StartupsEverywhere: Fresno, California. Bitwise Industries is a startup that’s working to increase workforce opportunities for diverse and often marginalized workers in “underdog cities.” We recently spoke with Bitwise’s CEOs and Co-Founders, Jake Soberal and Irma Olguin Jr., to learn more about their startup’s work, what makes Bitwise’s business model so unique, and how policymakers can work to support a diverse, equitable, and inclusive workforce.
COVID-19 changed the way VC firms invest in startups. Although many venture capitalists are leery of investing in startups that are far away from their homes or offices, the pandemic—and the ensuing reliance on video conferencing tools—has made VC firms more comfortable investing in early-stage companies based outside of traditional tech hubs.
