The Big Story: Amidst pandemic, data privacy debate continues. As the coronavirus pandemic forces people to rely on digital services to abide by statewide stay-at-home orders, the state- and federal-level debate over data privacy rages on.
A group of Senate Republicans this week formally introduced legislation—The COVID-19 Consumer Data Protection Act—that would protect consumers’ privacy during the outbreak by requiring that firms obtain opt-in consent from their users before using their data to track the spread of the virus. In California, the authors of the 2018 ballot initiative that led to the passage of the California Consumer Privacy Act also announced that they submitted 900,000 signatures for a second ballot initiative that would expand upon the CCPA’s current provisions.
One of the Senate bill’s sponsors, Sen. John Thune (R-S.D.), told Politico earlier this week that he hopes the current debate over COVID-related privacy concerns could help “springboard” broader talks about the need for federal data privacy legislation. Startups in particular need a uniform federal privacy law, since smaller firms do not have the manpower or funding to adequately navigate a state-by-state patchwork of privacy regulations. In lieu of a national data privacy framework, tech firms across the country are already relying on the European Union’s General Data Protection Regulation as a framework for protecting user privacy while undertaking contact tracing efforts. In order to effectively address consumer privacy concerns, particularly those highlighted by the coronavirus outbreak, policymakers should work on a federal framework that provides clear guidance for Internet companies of all sizes, while also ensuring that consumer data is not treated differently in each state and territory.
Policy Roundup:
Engine hosted remote town hall with Rep. Schweikert and Arizona startup founders. Rep. David Schweikert (R-Ariz.) joined Engine, accelerator SEED SPOT, and three entrepreneurs from the greater Phoenix area yesterday for a remote town hall to discuss how startups are currently navigating the uncertain landscape and what policymakers can do to help.
PPP loan concerns show the need for more direct startup relief. Small businesses that received Paycheck Protection Program loans are asking Congress and the Treasury Department to ease loan forgiveness requirements under the program, particularly the stipulation that PPP recipients use 75 percent of their funding to cover payroll costs. As we previously noted, it’s critical for lawmakers to look beyond PPP loans for startup relief, particularly when it comes to the equitable allocation of emergency funding. In an op-ed for CNBC, Steve Case—the founder of AOL and the Chairman and CEO of Revolution—said that Congress should work to support the U.S. startup community in future relief packages by providing more direct support to early-stage entrepreneurs, ensuring that applicable startups can access funding for vaccine research and other health-related efforts, and improving capital access for startups located in emerging markets.
New proposal to combat online child abuse. Rep. Anna Eshoo (D-Calif.) and Sens. Ron Wyden (D-Ore.), Kirsten Gillibrand (D-N.Y.), Bob Casey (D-Penn.), and Sherrod Brown (D-Ohio) introduced legislation—the Invest in Child Safety Act—in both chambers of Congress that would allocate a total of $5 billion over 10 years to crack down on those who create, view, and disseminate online child exploitation materials. The bill would create roughly 200 new positions within existing law enforcement groups and would double—from 90 to 180 days—the amount of time that Internet companies have to preserve evidence of abuse.
Lawmakers push for merger moratorium in next relief package. House Antitrust Subcommittee Chairman David Cicilline (D-R.I.) led a letter signed by 12 Democrats to House leadership calling for a merger moratorium to be included in the next COVID-19 relief package. The group of lawmakers said that the temporary freeze should not apply to mergers that involve firms “that are truly failing and have exhausted all other options or are in bankruptcy proceedings.”
Supreme Court orders additional briefing in Google v. Oracle. The U.S. Supreme Court ordered Google and Oracle to file supplemental briefs addressing the standard of review the appeals court should have used when considering a jury’s fair use ruling in favor of Google. This long-running copyright dispute concerns the permissible use of application programming interfaces, or APIs, which allow startups and other Internet firms to create products that work across a wide range of computer programs. As we pointed out earlier this year, if copyright law is interpreted in a way that restricts the use of APIs, it would chill growth and innovation across the tech sector. Startups and developers would be exposed to substantial infringement liability for past work and would need to negotiate licenses for every software interface they might possibly need going forward.
SEC eases crowdfunding requirements for small firms. The U.S. Securities and Exchange Commission announced that it is temporarily allowing small firms affected by the pandemic to pursue expedited crowdfunding offerings by “providing relief from certain rules with respect to the timing of a company's offering and the financial statements required.”
Pandemic has highlighted the importance of secure end-to-end encryption. In an op-ed for The Hill, former CIA and NSA director Michael Hayden said the coronavirus pandemic has underscored the importance of secure end-to-end encryption by exposing backdoor vulnerabilities in popular video conferencing and meeting services that have gained popularity as a result of statewide stay-at-home orders. Hayden said that the recent flaws demonstrate why mandating that tech firms create intentional vulnerabilities for law enforcement officials “undermines international trust in the security of American technology offerings.”
Startup Roundup:
#StartupsEverywhere: Woodland, California. Located in one of California’s busiest farming regions, Nytch is a new startup that's working to foster greater engagement between consumers and their local small businesses. Since small brick-and-mortar businesses are unable to put their entire inventories online, the mobile service allows local businesses to use their greatest assets—knowledge, experience, and product awareness—to provide local consumers with more convenient retail services.
Startup sector working to support downsized workers. U.S. startups and venture capital firms are working to find jobs for tech workers who have been laid off as a result of the pandemic by organizing virtual networking events, aggregating lists of employees affected by job cuts, and offering free tutorial and resume review services.
