Big Story: Congress charges ahead on ‘kids’ safety,’ despite tradeoffs
Policymakers across the board are eager to pass a law to “keep kids safe online.” While it’s an overall laudable goal shared by all stakeholders, including startups, it’s crucial that policymakers be specific about the goals of policy changes, clear-eyed about how effective those changes will be, and realistic about the inherent tradeoffs, including to privacy, security, and startup competitiveness.
Policymakers’ sense of urgency was on display last week when a House Energy and Commerce subcommittee held a hearing on protections for young users online. A main focus of the hearing was the Tools to Address Known Exploitation by Immobilizing Technological Deepfakes on Websites and Networks (TAKE IT DOWN) Act. That bill would criminalize the publication of non-consensual intimate imagery, including AI-generated content and require internet platforms to remove non-consensual intimate imagery—whether real or AI-generated—within 48 hours of receiving notice that it’s on the platform. The Senate has already passed the bill, and both President Donald Trump and First Lady Melania Trump have voiced support. House Energy and Commerce Committee leadership signaled they want to move it quickly. While the bill is broadly backed—especially as many general-use platforms already prohibit adult content—civil liberties and tech advocates have raised concerns around privacy, security, and free expression.
The TAKE IT DOWN Act was just one of the many proposals discussed, and committee members and witnesses urged pursuing several ideas, including prohibiting Internet companies from offering certain tools such as encrypted messaging and recommendations, mandating age verification, banning all young users from accessing social media, and amending Section 230 (the foundational Internet law that lets Internet platforms of all sizes host user content without fear of ruinous litigation). While each of these ideas has had some support from lawmakers in the past, they threaten to undermine user privacy, security, and expression, and would dramatically increase compliance and legal costs for startups. During last week’s hearing, Rep. Jay Obernolte (R-Calif.) emphasized the importance of avoiding overly burdensome requirements for small app developers and warned that the threat of abusive litigation could unfairly harm startups and small businesses.
As efforts to regulate the Internet picks up momentum, policymakers must carefully weigh the unintended consequences, particularly for startups, the vast majority of which are building products for general audiences, not specifically targeting young users. Balanced policy is essential to ensure startups can compete and deliver safe, innovative products that users want.
Policy Roundup:
Policymakers discuss access to capital for small businesses. The House Financial Services Committee held a hearing last Tuesday to explore how Congress can better support small businesses and boost capital formation across ecosystems. More than 160 startup founders, investors, and industry groups from over 35 states joined Engine in a letter urging Congress to expand the definition of accredited investor, unlocking funding for more founders from more communities.
SCOTUS weighs fate of critical broadband program. The Supreme Court heard arguments last Wednesday on the constitutionality of the Universal Service Fund, a critical broadband affordability program. The outcome of the case could reshape some of the country’s largest Internet subsidy efforts, which are critical for closing the digital divide for startups and their users.
Startup-focused trade agenda should constructively address digital barriers. The House Ways and Means trade subcommittee held a hearing last week, where members and witnesses both underscored a desire to tackle key priorities for startups like making permanent the moratorium on customs duties for electronic transmissions, pushing back on digital services taxes, and ensuring cross-border data flows. Relatedly, Engine and other industry groups sent a letter to the administration outlining the importance of balanced and stable digital trade leadership.
Governor blocks controversial AI bill harmful to innovation. Virginia won’t move forward with new AI legislation after Governor Glenn Youngkin (R) vetoed H.B. 2094 last Monday, adding that the framework would place an “especially onerous burden on smaller firms and startups.” Several states have tried to create their own AI rules, which will create a patchwork of requirements for each state, adding costs for startups and hurting their competitiveness.
On The Horizon:
TUE 4/01: The House Committee on Small Business will convene a hearing to discuss deregulation at 10:00 AM ET.
TUE 4/01: The House Oversight and Accountability subcommittee on economic growth, energy policy, and regulatory affairs will convene a hearing to discuss the economics of AI and data centers at 10:00 AM ET.
TUE 4/01: The Senate Judiciary subcommittee on antitrust, competition policy, and consumer rights will convene a hearing to discuss improvements to the technology sector at 2:30 PM ET.
WED 4/02: The House Committee on Small Business will convene a hearing to discuss how Congress can help empower investments into small businesses at 10:00 AM ET.
WED 4/02: The House Judiciary subcommittee on administrative state, regulatory reform, and antitrust will convene a hearing to discuss how AI influences innovation and competition at
10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Raleigh, North Carolina. John Starke’s career in manufacturing cultivated a passion for quality control and computer vision technology that led to the founding of MyMatR. Focused on smarter waste disposal, MyMatR empowers individuals to make informed decisions about waste with AI-powered solutions. We sat down with the MyMatR CEO to discuss his innovative product, the future of manufacturing, and more.
