The Big Story: States pushing social media laws based on unfounded bias claims. Republican state policymakers across the country are pushing for laws that would stop social media companies from engaging in content moderation, amplifying GOP politicians’ long-standing complaints about anti-conservative bias, which were refuted in a recent report. But while Republicans have directed their ire at large Internet companies and Section 230—a bedrock Internet law that allows companies of all sizes to host and moderate user content without being held liable for the content they moderate or for what their users post—their state-level efforts to ban moderation are legally problematic and would hurt small and new companies attempting to compete in the Internet ecosystem.
Earlier this week, Florida’s Republican Gov. Ron DeSantis proposed new legislation to combat alleged social media “censorship” that would allow users to sue Internet companies if they feel mistreated and would impose daily fines of $100,000 on companies that suspend the account of a statewide candidate. While DeSantis’s proposal is likely unconstitutional, it comes on the heels of similar GOP-led efforts in other states—including Arizona, Kentucky, and Oklahoma—to disincentivize companies’ attempts to moderate political speech online. Even as Republicans continue to make claims of anti-conservative bias by large Internet platform, however, a new report released this week by the NYU Stern Center for Business and Human Rights refutes the GOP lawmakers’ contention by finding that “the claim of anti-conservative animus is itself a form of disinformation: a falsehood with no reliable evidence to support it.”
Despite the fact that some Republican lawmakers on the federal and state levels have framed their criticisms of Section 230 around the actions of the largest tech firms, limiting Internet companies’ ability to moderate content—particularly by introducing legislation that is based on falsehoods—would have an outsized impact on the startup ecosystem. Even with Section 230, a startup can spend tens of thousands of dollars just to get a lawsuit dismissed; changing the law would cause these costs to skyrocket into the hundreds of thousands of dollars. As we highlighted in our recently released Startup Agenda 2021, policymakers should consider the startup community’s needs and evidence-backed concerns about content moderation in the current debate over Section 230.
Policy Roundup:
Sen. Klobuchar releases sweeping antitrust legislation. Sen. Amy Klobuchar (D-Minn.), the incoming chair of the Senate Judiciary antitrust subcommittee, released antitrust reform legislation this week that proposes a major overhaul of existing competition laws. The bill—the Competition and Antitrust Law Enforcement Reform Act—calls, in part, for shifting burden of proof obligations to the parties seeking a merger, increasing enforcement standards, and allowing regulators to impose fines of up to 15 percent of a company’s annual revenue.
CFIUS scrutinizing startup investments. An enforcement team with the Committee on Foreign Investment in the United States (CFIUS)—which reviews foreign investments in U.S. companies for potential national security concerns—is scrutinizing startup investments that can be traced back to China. CFIUS officials are reportedly looking at venture capital investments, even small-dollar transactions that are years old, in order to identify Chinese funding of startups that are creating technologies viewed as critical to U.S. national security.
California Supreme Court throws out challenge to Proposition 22. The California Supreme Court rejected a lawsuit this week from a group of rideshare drivers and the Service Employees International Union challenging the constitutionality of Proposition 22—a ballot measure, passed last year, that permanently reclassifies California's app-based drivers as independent workers. Proposition 22 was introduced after California passed a law requiring companies in the state to reclassify many of their independent contractors as employees, a move that would have disproportionately affected startups.
Biden signs order mandating review of public charge rule. President Joe Biden signed an executive order this week requiring federal agencies to review the Trump administration’s “public charge” rule, which critics have argued is a “wealth test” for immigrants who are seeking legal status in the country. As we noted earlier this week, the Biden administration should work to reverse the public charge rule and should focus on boosting immigrant entrepreneurship—including by continuing to roll back the Trump administration’s harmful immigration policies—in order to ensure that U.S. startups have access to the talent they need to grow.
Startup Roundup:
#StartupsEverywhere: Iowa City, Iowa. Journimap L3C is a social enterprise startup and cloud-based application that uses qualitative research methods and ethnography concepts to map out the experiences and journeys of patients, customers, service workers, and others. We spoke with the Founder and CEO of Journimap, John Corrigan, to learn more about his startup’s work, how the pandemic has affected his business, and why net neutrality and social business models are important.
