The Big Story: Possible federal privacy framework on the horizon
After years of discussions and negotiations, lawmakers are taking serious steps towards creating a much-needed federal privacy framework that would create consistency for startups and protections for consumers. Earlier this week, the House Energy and Commerce subcommittee on Consumer Protection and Commerce held a hearing discussing the American Data Privacy and Protection Act (ADPPA)—a draft bipartisan, bicameral bill that is the first meaningful step towards a federal privacy law following years of negotiations. Subcommittee Chair Jan Schakowsky (D-Ill.) reportedly said this week that the subcommittee will consider and vote on the bill during a markup next week.
Earlier this month, a bipartisan group of lawmakers that will be key to passing a federal privacy law released a draft of a bill that, if passed, would create a uniform set of obligations for entities that collect consumer data as well as a uniform set of protections and rights for consumers across the country. The ADPPA would codify the kinds of obligations for consumers and consumer rights found in frameworks like the European Union’s General Data Protection Regulation and those created by comprehensive state privacy laws—including the rights to access, correct, delete, and port data—and it would institute new processes at the FTC that could create clarity around company obligations on things like data security, privacy by design, and data minimization. The bill also contains major shifts in existing privacy law, including prohibiting targeted advertisements for users under the age of 17 and limiting the transfers of data belonging to users between the ages of 13 and 17. Most notably for startups, the bill includes a narrow small business exception that would exempt companies with data on fewer than 100,000 individuals from a few of the obligations created by the bill. The bill would also preempt comprehensive state privacy laws—but it leaves the door open to existing and future narrow privacy laws, including around violations of California’s data security rules and Illinois’ biometric privacy law—and allows the framework to be enforced by the FTC, state attorneys general, and private lawsuits.
While the bipartisan, bicameral bill is the first real chance Congress has to passing a federal privacy law, it has already come under fire from industry groups who have criticized the limited preemption language, the inclusion of a private right of action, and the potential impact it could have on the ad-supported online ecosystem. At the same time, consumer advocates and some Democratic lawmakers—including key members of the Senate Commerce Committee—say the bill doesn’t go far enough to protect consumers.
Engine has long-stated the need for a federal privacy framework as both consumers and startups can benefit from a law that creates strong protections for consumers and consistent obligations for companies. As policymakers continue to deliberate, they should keep in mind the need for a privacy framework that helps startups compete.
Policy Roundup:
New White House task force to focus on tech-driven, gender-based violence. The Biden administration this week launched a task force that will develop recommendations for policymakers, tech companies, and others “to prevent and address technology-facilitated gender-based violence” with a specific examination of the ties between misogynistic behavior online and violent extremism. The announcement comes after recent high-profile tragic shootings, including one at a grocery store in a predominantly Black neighborhood in Buffalo, N.Y. where the shooter cited violent, white supremacist rhetoric and another at a elementary school in Uvalde, Texas, where the shooter had repeatedly been reported for threatening women online. The task force will create a set of recommendations around, among other things, policy solutions to increase accountability for individuals who perpetrate online harms, studying the impacts and supporting the victims of online gender-based harassment, and developing programs to support marginalized communities that are often the target of online harassment, abuse, and disinformation campaigns.
Recent federal policy moves on SEPs and what that means for startups. Last week the government withdrew a controversial policy statement about standard-essential patents (SEPs), but that also created a void and some uncertainty because the government has still not moved forward with a more balanced draft policy from 2021. Patent policy debates are increasingly centering around SEPs—and that can have implications for a wide range of startups—as this is another area where balance in the patent system could free up more space for innovation and enhance the landscape for competition. Read more about this complex area of the law, how and where startups have a stake, and how policymakers should and can move towards more balanced SEP implementation and enforcement, here.
House passes bill on equitable access in financial services. This Wednesday, the House passed a package of 13 bills aimed at eliminating disparities in and increasing inclusion and equitable access to the financial services sector. As we’ve detailed, founders from underrepresented communities face increased barriers to access to capital for their startups. Among other things, the legislative package would have regulators create diversity standards and reporting requirements for companies in the financial sector and have the Federal Reserve use monetary policy to eliminate discrepancies across racial and ethnic groups.
Ten years after DACA creation, recipients are still waiting. Ten years ago this week, the Obama administration established the Deferred Action for Childhood Arrivals (DACA) program providing temporary protections for individuals brought to the U.S. as minors. But 10 years later, recipients—including the many immigrants who contribute to the startup and innovation ecosystems—are still awaiting a permanent solution to stay in the country legally and with certainty. In addition to Congress failing to advance legislation creating a permanent path to citizenship for DACA recipients and other Dreamers, the entire program was ruled unlawful by a federal court last year, and an appeal of that decision is still making its way through the courts.
Startup Roundup:
#StartupsEverywhere: Austin, Texas. Legal Karma is a software platform designed to expand the availability of legal services through a contract automation system that supports legal firms. Kory Kelly, Founder & CEO of Legal Karma, spoke with us about his business, the importance of programs that support founders through the process of building a startup, and the burdens that the differences in state tax and employment laws can place on startups hiring remote workers.
