The Big Story: America COMPETES is a mixed bag for startups
The new sweeping House package aimed at boosting American competitiveness and innovation has several provisions that would dramatically improve the startup ecosystem, but the bill also includes an unrelated bill that would harm e-commerce startups. Introduced this week, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act is the House's companion proposal to the Senate's United States Innovation and Competition Act (USICA), which passed the Senate last summer. Both bills have some common overall themes—each share the goal of strengthening domestic R&D and investing more in innovation. But there are important differences between the House and Senate proposals which will have to be hashed out in coming weeks.
Both bills promise historic investment to fuel support for U.S. tech ecosystems and scientific research. While the House bill doesn’t include—or has smaller funding levels for—several components from the Senate’s version, it has several provisions that would strengthen the innovation ecosystem and help make it more accessible and equitable, such as studying barriers for underrepresented innovators, increasing STEM education in rural schools, and state grants to increase equitable access to STEM and computer science education resources. The bill also includes a proposal to have the Commerce Department create regional technology hubs throughout the country to provide workforce education and entrepreneurship development.
Critically, the bill would create a category of visas for startup founders, key startup employees, and their family members. Engine has long supported efforts to create a startup visa, which would help attract more entrepreneurs to come to the U.S. to build companies, contribute innovations, and create jobs.
However, the COMPETES Act also contains the SHOP SAFE Act, which would threaten innovation and stand in the way of e-commerce startups and Internet-enabled small businesses. As we’ve mentioned before, SHOP SAFE would place high compliance burdens on e-commerce startups with the goal of deterring unsafe counterfeits online. But the text is so broad it would require a variety of startups that offer some e-commerce related product or service to review all third-party posts to determine whether they could potentially infringe a trademark. This would create an impossible and unaffordable task for all but the largest e-commerce platforms and open startups and small businesses to more costly litigation—things that could force them out of business entirely. Some members of Congress have articulated these concerns and previously committed to fixing SHOP SAFE’s flaws before advancing it, confirming that now is not the time, and COMPETES is not the place, to move this problematic proposal forward.
As House members discuss over the next week before the vote, we urge policymakers to focus on the positive, pro-innovation provisions and reconsider any that stand to stifle innovation or hurt startups.
Policy Roundup:
Senate to vote on key nominee. The Senate Commerce Committee is set to vote next week on outstanding nominees, including Gigi Sohn, who has been nominated to the Federal Communications Commission and would be in a position to support startup policies if confirmed. As we’ve explained, startups are waiting for a fully-staffed FCC to tackle key telecom issues that startups face, including increasing broadband adoption and access across the country.
Study finds privacy patchwork causes compliance burdens. An increasing number of state privacy laws could cost small businesses billions of dollars in the coming years, warns a new study from the Information Technology and Innovation Foundation. According to the study, state privacy laws could create out-of-state costs exceeding $1 trillion over 10 years as more states pass their own laws, with $200 billion of those costs falling on small businesses. Startups need Congress to pass a federal privacy framework that creates strong protections for consumers and clear, consistent obligations and responsibilities for companies.
EU Parliament advances Digital Services Act. The European Parliament adopted the Digital Services Act (DSA) resolution last Thursday. The draft law will govern online content in the European Union, and while all intermediaries face some requirements under the DSA, it takes a tiered approach based on intermediary size and characteristics. The parliament made several improvements from the original draft and as compared to other proposals around the world by avoiding upload filtering requirements and very short takedown timelines, for example. The DSA now moves to a ‘trilogue’ with the European Council and European Commission where further improvement should be made.
Biden administration tweaks visa path for STEM students. Last week, the Biden administration announced a series of policy changes designed to retain foreign students educated in STEM fields to boost innovation, including expanding the fields of study that make students and recent graduates eligible for the visa. As we’ve said in the past, allowing STEM-educated students to stay in the U.S. and get job training will help keep much-needed tech talent in the country.
Crypto reporting in infrastructure bill raises constitutional concerns. In an op-ed for CoinDesk, Protocol Labs’s Marta Belcher makes the case that the reporting requirements in the Infrastructure Investment and Jobs Acts—signed into law in November—violate the Fourth Amendment and will result in the government obtaining information about transactions that fall below the $10,000 threshold in the law. As we noted before the bill passed, the reporting provisions around digital assets were broadly written and would create requirements and privacy concerns for a wide swath of the cryptocurrency ecosystem, including startups.
Open App Markets Act set for a vote next week. The Open App Markets Act will get a vote in the Senate Judiciary Committee next week. While the bill is aimed at requiring Apple and Google to host apps outside of their app platforms, critics of the bill say forcing open the app stores could hamstring the companies' efforts to “block apps that promote online piracy, endanger children, allow hate speech or harassment, facilitate criminal or terrorist activity, or even pose a threat to national security,” undermining user trust and leading to consumer harm. The concerns mirror the concerns voiced by advocates and lawmakers about the bigger antitrust bill advanced in the committee during a markup last week.
Join us for the release of the 2022 Startup Policy Agenda on Monday. On Monday, January 31st at 12 pm ET Engine and entrepreneurs from across the country will discuss startup policy priorities for 2022. Interested attendees can register here.
Nuts and Bolts of Privacy: Anonymous Speech event next Friday. Join us for a conversation on anonymous speech as part of our Nuts and Bolts of Privacy series, co-hosted by the Charles Koch Institute. Our panel of experts will discuss the important role anonymous speech plays in protecting privacy and promoting free expression on the Internet, the legal and technical issues around anonymous speech, and what it means for discourse online. Join us next Friday, February 4th at 12 pm ET, and register here.
Startup Roundup:
#StartupsEverywhere: Portland, Oregon. Based in Portland, Oregon, Adhere Gear is focused on developing sustainable use IoT Smart Cargo Network for cargo operations and logistics. Founder, CEO and Chief Engineer Robert Buchanan took a moment to share with us the origins of Adhere Gear, how he and his team hope to improve the global use of cargo, and his vision for the company’s future.
