Big story: FCC digs into digital discrimination
This week, the Federal Communications Commission (FCC) voted to kickstart proceedings to tackle digital discrimination—the lack of reliable, accessible, and affordable broadband in certain communities across the country—which creates barriers for would-be startup founders, especially underrepresented founders.
The FCC’s Commissioners voted unanimously in favor of advancing the issue, meaning the agency will begin a process to determine what rules would best help facilitate equal access to broadband. The vote comes after the Infrastructure Investment and Jobs Act was signed into law last year, which included funding for broadband access and inclusion efforts.
Moving forward, the commission will begin the process for implementing such rules, starting with establishing a definition of what counts as “equal access” for broadband and examining why and how this discrimination is occurring in the U.S. As was discussed at the meeting, and as we’ve recently mentioned, digital discrimination can take many forms—for example, living in a community or area without the proper infrastructure to support high-speed Internet, or even living in a specific apartment building that Internet service providers won’t service. This furthers the digital divide and keeps specific communities out of the innovation ecosystem.
As we’ve long argued, reliable, affordable, and accessible broadband has always been an essential component of the U.S. startup ecosystem. Startup founders, members of the tech workforce, and digital entrepreneurs need access to the Internet to contribute to innovation and economic and job growth. We applaud the FCC for advancing these critical issues so that everyone can contribute.
Policy Roundup:
New copyright bill would authorize technology requirements for startups with user content. Yesterday, Senators Tillis (R-N.C.) and Leahy (D-Vt.) introduced a bill that would authorize the U.S. Copyright Office to select technologies that startups encountering user-generated posts have to purchase or build and maintain. The proposal would amend the Digital Millennium Copyright Act (DMCA) and expand the definition of technical measures—which are (currently) those “used by copyright owners to identify or protect copyrighted works” and which online service providers are expected to accommodate. Instead, the bill would condition DMCA safe harbor eligibility on companies affirmatively adopting certain copyright management technologies. And it would create a path for the Copyright Office to select different technologies that online service providers would have to adopt—or else face private lawsuits and hefty damages. While the bill is ostensibly aimed at well-resourced platforms, it tees up a complex and expensive compliance framework that would sweep up the vast majority of startups that host user-generated content but see little to no infringement and lack the resources of large competitors.
Another bill to restrict acquisitions. This week, Sen. Elizabeth Warren (D-Mass.) and Rep. Mondaire Jones (D-N.Y.) introduced the Prohibiting Anticompetitive Mergers Act—legislation that would ban mergers and acquisitions over a certain amount, let regulators reverse mergers, and limit companies’ ability to challenge enforcement agencies' decisions in court. The bill—like other proposals from policymakers that would limit which companies can acquire startups—is rooted in inaccurate presumptions about the role of acquisitions in the startup ecosystem. Rather than harming the startup ecosystem, the data shows a strong positive relationship between startup exits via acquisition and startup investment.
SEC under fire for crypto information-gathering tactics. This week, Rep.Tom Emmer (R-Minn.) and other lawmakers sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler calling for clarification on how the SEC gathers information on private companies involved in the cryptocurrency market following tips from the crypto community that the SEC Chair’s information reporting requests were “overburdensome” and “are stifling innovation.” On the heels of the digital assets executive order, policymakers have to work together to develop a consistent regulatory framework. As Emmer’s office explained, it’s crucial that any government inquiries open up avenues for innovation—especially as startups continue to grow in the cryptocurrency space.
Low-quality patents stifling U.S. semiconductor manufacturing, supply chains. In a recent op-ed, former Rep. Bob Goodlatte (R-Va.) explains how abusive litigation and an “epidemic of low-quality semiconductor patents in the U.S.” are hindering domestic manufacturing and contributing to the current supply chain crisis. And he calls on policymakers to direct their attention to the problem and work towards ensuring there is bipartisan support for elevating high-quality patents—for example, through restoring tools established by the America Invents Act to crack down on abuse and bring balance back to the system.
Senate Finance holds Indo-Pacific trade hearing. The Senate Finance Committee held a hearing this week to examine trade in the Indo-Pacific region and U.S. engagement there. Senators and witnesses alike highlighted the importance of Indo-Pacific trade and lamented China-oriented trade frameworks, which threaten to undermine the free flow of data across-borders. U.S. trade leadership is critical in the region to ensure that American startups are able to take part in this rapidly growing part of the world through Internet openness and low barriers to entry. As the Biden administration engages allies and further develops the Indo-Pacific Economic Framework, they must work to include the strongest possible digital trade provisions.
Change to IRS filing requirement could ease startups’ compliance burden. This week, Rep. Patrick McHenry (R-N.C.) and Rep. Adrian Smith (R-Neb.), introduced the Eliminating Paperwork for Startups Act—legislation that would modernize how 83(b) election forms are filed with the Internal Revenue Service. Often a tax savings, 83(b) elections give startup founders the option to pay taxes on the value of their startup stock on the date it was issued rather than when it vests. The IRS has traditionally required submission via paper mail, but the bill would make permanent COVID-19-related measures that allow individuals to file forms and get responses electronically, easing the filing process for founders.
Startup Roundup:
#StartupsEverywhere: Walnut Creek, California. Neolth works to increase access to mental health support for students by offering technology solutions in schools, youth, and healthcare organizations. Co-Founder and CEO Dr. Katherine Grill spoke with us about her work within the intersection of education and healthcare, the challenges of navigating privacy laws, and what she hopes to achieve next.
