The Big Story: Congress looks to build momentum on privacy legislation
This week, a congressional subcommittee held a hearing exploring federal data privacy legislation, a top priority for startups. The hearing comes amid the emerging mosaic of state privacy laws that can create confusion and duplicative costs for startups. The hearing, held by the House Energy and Commerce subcommittee on Innovation, Data, and Commerce, focused on building upon legislation that passed through the committee last Congress and explored several issues important to startups in the privacy debate, including whether to preempt state laws, whether to allow private rights of action, and how to properly scope requirements for small businesses and startups.
Last year, a bipartisan group of congressional leaders released a draft federal privacy framework that sought to create a uniform set of obligations for entities that collect consumer data and protections and rights for consumers across the country. Although the bill ultimately did not advance out of either chamber last time, this week’s hearing makes clear that establishing a federal privacy law remains a top priority for policymakers on both sides of the aisle. That bill, the American Data Privacy and Protection Act, was the result of hard-fought compromise, passed out of committee 53-2, and it is the closest Congress has come to passing a comprehensive federal privacy law.
At Tuesday’s hearing, members explored key features of that bill and the broader privacy debate that are central for startups. Subcommittee Chair Gus Bilirakis (R-Fla.) highlighted the importance of preemption of state laws, saying “small and medium sized businesses need certainty” and noted the “time and resources” they must expend “to survive in the digital economy” under a patchwork of state laws. Members likewise discussed the importance of limiting bad faith litigation that can arise through private rights of action.
As Engine highlighted in a statement for the committee record, “Startups need a federal privacy framework that creates uniformity, promotes clarity, limits bad faith litigation, accounts for the resources of startups, and recognizes the interconnectedness of the startup ecosystem.” Startups should be heartened by this progress, and we encourage policymakers to take meaningful steps toward passing a uniform, comprehensive federal data privacy framework.
Policy Roundup:
Biden officials defend spy program at heart of data transfer issues. This week, Biden administration officials urged Congress to renew Section 702 of the Foreign Intelligence Surveillance Act that allows U.S. Intelligence agencies to obtain communications that it deems tied to “foreign intelligence targets.” The controversial surveillance program is up for reauthorization this year and faces an uphill battle in Congress, with many influential members skeptical. Section 702 has been a long-time concern of privacy advocates and foreign trading partners, and the program contributed to the downfall of previous data transfer pacts with the European Union. U.S. startups—especially those that rely on transborder data flows to support international trade—have long been wary of the impacts the law has on their ability to operate abroad.
Biden student loan forgiveness plan appears before Supreme Court. The Supreme Court heard oral arguments this week to decide the fate of the Biden administration’s plan to forgive up to $20,000 in student loan debt. The plan has faced multiple challenges since it was announced, and it appears unlikely the Court will allow the forgiveness to move forward. In the interim, President Biden has taken other measures to tackle student debt—including proposed changes to the revised Pay As You Earn repayment plan. As Engine wrote this week, student loans overwhelmingly burden young Americans, including would-be entrepreneurs, and especially those from underrepresented communities who already face high barriers to launching startups. For a better U.S. startup ecosystem, policymakers must act to address the student loan crisis.
Research shows antitrust intervention helps large competitors, not necessarily startups. In a recent Harvard Business Review article, professors Riitta Katila and Sruthi Thatchenkery reviewed the findings of their new paper exploring the impact of antitrust on innovation and competition. Most notably, they found that rather than enabling the most innovative firms, antitrust actions helped the largest competitors of the targeted firm “who arguably didn’t need the help.” The findings suggest caution in today’s tech competition debates as policymakers and antitrust enforcers consider actions in the tech sector that they hope will invigorate competition.
EU launches consultation aiming to advance network access fees. Last week, the EU launched its long-expected consultation on “network access fees,” the latest step in efforts to make Internet companies pay for the traffic they generate. This comes after months of European Internet service providers lobbying for tech companies to pay for upgrades to their networks and despite European telecom regulators saying such charges do not appear justified. Startups are watching this and similar debates closely as the proposal threatens to undermine essential net neutrality principles and negatively impact the broader Internet ecosystem.
Proposed Texas law calls for content-based website blocking. A Republican lawmaker has introduced a state law in Texas that could force Internet service providers (ISPs) to block websites that feature information on how to obtain abortions or abortion pills. The bill currently lists six websites that would be blocked should the bill be enacted, and the ISPs would also have to block any websites or online platforms that are “operated by or on behalf of an abortion provider or abortion fund.” Legislation like this demonstrates the importance of net neutrality protections, which prohibit throttling or blocking certain websites, and laws like Section 230, which enables platforms to host user content without risking legal liability.
Startup Roundup:
#StartupsEverywhere: Kansas City, Missouri. Emily Brown, Co-Founder and CEO of Free From Market, is an ardent believer that food is medicine. She has firsthand experience with the impact that a lack of access to healthy foods can have on health outcomes, and created an e-commerce service to address this very issue. We spoke with her about her thoughts on barriers to accessing capital, compliance with data privacy rules, and current restrictions around SNAP and EBT eligibility.
