The Big Story: Broad, diverse coalition underscores importance of Section 230
This week, Engine joined more than three dozen public interest organizations, academics, free expression advocates, industry associations, and companies in a letter highlighting the value of Section 230 in enabling users, community building, and expression online. The letter was sent to members of the Senate Judiciary Subcommittee on Privacy, Technology, and the Law ahead of a hearing Wednesday on Section 230, a foundational Internet law that enables platforms of all sizes to host and moderate user content without risking ruinous liability.
At Wednesday’s hearing, and too often in policy debates, Section 230 is portrayed as a protection for large Internet companies. In reality—as the letter signers highlight—it is a protection for the whole Internet ecosystem, from the largest platforms, to startups, all the way down to individual Internet users. For startups, Section 230 enables them to host user content without threat of being driven out of business by costly bad-faith lawsuits over something one of their users said. For individual Internet users—especially digital entrepreneurs who use the Internet to earn a living—Section 230 enables them to create and share content and find and grow their communities.
Policymakers are right to want an Internet that is as healthy, vibrant, and innovative as possible. But as they continue to deliberate over Section 230, they need a baseline understanding of how it creates broad benefits for many disparate groups and must consider how changes to this law or the protections it provides would negatively impact startups and the broader Internet ecosystem—not just large tech companies.
Policy Roundup:
Silicon Valley Bank shut down by FDIC. Today, California regulators and the Federal Deposit Insurance Corporation (FDIC) announced it would shutter the Silicon Valley Bank, a mainstay bank amongst startups and venture capital firms, and place it into receivership with the FDIC. Unable to keep up with their clients’ demands for their funds amidst rising interest rates and a downturn in startup funding, the bank was forced to sell investments at a significant loss. Silicon Valley Bank had positioned itself to attract clients from the startup community, offering more relaxed lending criteria and elevated interest rates on deposits. With more than 90 percent of the deposits at the bank possibly uninsured, customers may not get back all of their deposits, including startups.
Key telecom nominee withdraws from process. Biden nominee to the Federal Communications Commission Gigi Sohn announced on Tuesday her withdrawal from the nomination process. Sohn’s decision came shortly after Sen. Joe Manchin (D-W.Va.) announced that he would vote against her, which left her without a path to confirmation. Sohn sat for three confirmation hearings over the two years since President Biden initially nominated her. Her withdrawal sends the administration back to the drawing board and leaves the FCC without a majority and unable to advance many key startup priorities.
Engine comments on need for federal privacy framework. This week, Engine submitted comments to the National Telecommunications and Information Administration highlighting the need for a federal privacy framework to establish clear rules of the road for startups, including those that look to serve gaps in the market for historically underserved communities. The comments were in response to the agency’s request for comment on privacy, equity, and civil rights and underscored the experiences of many underrepresented founders creating specific, needed innovations for their communities.
Irish privacy regulator threatens cross-border data transfer mechanism. Ireland’s Data Protection Commission is poised to suspend a legal tool relied upon by U.S. companies—including startups—to transfer data between the European Union and the U.S. Companies turned to the transfer mechanism, known as Standard Contractual Clauses (SCCs), as one of the only remaining legal methods of transatlantic data transfer following the invalidation of Privacy Shield in 2020. Many startups were deeply impacted by the Privacy Shield ruling and invested heavily in switching to SCCs to serve their EU users. A replacement to Privacy Shield isn’t expected to come online until summer, but the Irish decision on SCCs—which pertains to Meta but will impact all companies using them—is expected to be final first, in mid-May.
Startup Roundup:
#StartupsEverywhere: Framingham, Massachusetts. getWise is an online platform that offers affordable access to exclusive video tips and training from vetted and trusted experts. When major life events forced her to restart her career, founder Kathryn Rose used the power of her professional network and crafted a vision for getWise. We spoke with her about her arduous fundraising journey, her experience navigating numerous privacy frameworks, and the need for resources for women entrepreneurs.
Share of investment in Black women and Latina-founded startups hits high—of 1%. A new report tracking venture capital investment in startups led by Black women and Latinas showed those founders are receiving more funding than ever, but those figures are still woefully inadequate. Latina and Black women encounter both gender discrimination and racial biases, and they face significant barriers to accessing capital despite being the fastest-growing group of founders.
