The Big Story: Congress increases pressure on vital Internet law. Policymakers are ramping up attacks on Section 230 of the Communications Decency Act, the 1996 law that has allowed startups that host user content to thrive. While this law provides online companies of all sizes with the ability to moderate users’ content without being held liable for users’ speech, the latest round of attacks on Section 230 have been largely framed around Internet companies’ content moderation practices—a difficult, time consuming, and expensive task for any online platform.
New legislation introduced earlier this week by Sens. John Thune (R-S.D.) and Brian Schatz (D-Hawaii)—the Platform Accountability and Consumer Transparency (PACT) Act—would effectively require platforms to remove illegal content within 24 hours, and build out costly and time consuming user complaint and appeals processes. Last week, Sen. Josh Hawley (R-Mo.) introduced legislation that would amend Section 230 in order to allow users to sue Internet firms for “selectively enforcing” their terms of service, a change that could allow Internet trolls to extort settlements from platforms that seek to block objectionable content from their sites. And Sen. Kelly Loeffler (R-Ga.) also introduced legislation that would require platforms to take “reasonable” steps to remove unlawful content and require platforms to moderate user content in a politically neutral way or risk losing Section 230 protections.
These bills are only the latest in a stream of recent assaults on Section 230 over platforms’ content moderation decisions. The Department of Justice released a set of proposed measures last week that would make a series of changes to the law, including making it easier for users to sue online platforms. And President Donald Trump last month signed an executive order targeting “online censorship” after Twitter fact-checked several of the president’s tweets.
Startups in particular are aware of just how expensive it can be to fend off even frivolous lawsuits resulting from their content moderation efforts. That's why giving Internet platforms the flexibility they need to moderate their user-generated content has allowed these platforms to launch and grow. As former Rep. Chris Cox (R-Calif.)—one of the original authors of Section 230—said in a recent RealClearPolitics op-ed, Section 230 is just as important today as it was in 1996. “Without Section 230’s clear limitation on liability, it is difficult to imagine that most of the online services on which we rely every day would even exist in anything like their current form,” Cox noted.
Policy Roundup:
Tech sector pushes back against suspension of visas for foreign workers. The Trump administration signed a proclamation this week temporarily halting the issuance of work visas to high-skilled foreign workers, including those issued under the H-1B program. U.S. tech firms quickly pushed back against the decision by highlighting the critical role that high-skilled workers play in driving innovation across the country. As Engine noted in a statement, “this proclamation hampers the tech sector’s ability to respond to the ongoing outbreak by limiting the effectiveness and reach of its workforce.”
New bill would weaken encryption. A group of Senate Republicans introduced legislation—the Lawful Access to Encrypted Data Act—that would require tech firms to build into their products a way for law enforcement officials to gain access to encrypted data. As we noted in a statement, this legislation would jeopardize the ability for tech companies—including startups—to ensure the security and privacy of their users’ data.
Several European countries offer to limit scope of digital tax. The finance chiefs of the United Kingdom, France, Italy, and Spain wrote a letter to Treasury Secretary Steven Mnuchin saying that the four countries were open to limiting the scope of a proposed global digital services tax being discussed by the Organisation for Economic Co-operation and Development (OECD) after Mnuchin reportedly decided to withdraw from the discussions. Countries across the world are increasingly implementing and proposing digital services taxes that are directed largely at U.S. Internet firms, and there are concerns that these companies will charge startups higher costs for the products and services they depend upon in order to offset the levies.
House Democrats allocate $100 billion towards broadband. House Majority Whip James Clyburn (D-S.C.) and other House Democrats introduced legislation—the Accessible, Affordable Internet for All Act—that would allocate $100 billion for improving high-speed broadband access in underserved and rural communities. The bill is part of the Democrats’ $1.5 trillion infrastructure bill, introduced last week, which looks to address a host of infrastructure concerns amidst the coronavirus pandemic.
California AG moves to force tech firms to comply with AB 5. California Attorney General Xavier Becerra’s office plans to file a preliminary injunction to force tech firms such as Uber and Lyft to comply with AB 5, the state law which changed the rules for determining whether someone is an independent contractor or an employee. Becerra and several city attorneys sued the ride-sharing firms in May to compel them to treat their gig workers as employees, and the injunction would force the companies to reclassify their drivers as employees within the next few weeks. Engine previously filed an amicus brief with several other organizations warning about the unintended harms of AB 5 on startups and entrepreneurs after the law went into effect on Jan. 1st.
Study shows economic benefits of the America Invents Act & patent review. A report conducted by The Perryman Group found that the Leahy–Smith America Invents Act (AIA)—which established the post-grant and inter partes review procedures (PGR & IPR) at the patent office —has substantially reduced patent litigation costs and made significant contributions to the U.S. workforce and economy. IPR and PGR are more efficient and affordable mechanisms to challenge low-quality patents. The report estimates that, from 2014-2019, these AIA reviews led to an increase of nearly $3 billion in U.S. business activity, and concludes that the AIA both supports innovation and generates substantial economic benefit.
Supreme Court refuses to hear tech-backed challenge to IRS rules. The U.S. Supreme Court declined to hear a challenge from tech companies to an Internal Revenue Service regulation that requires firms to allocate some of their employee stock expenses to their foreign subsidiaries. The appeal—brought by Intel Corp.’s Altera unit—means that tech companies will have to pay billions of dollars in additional taxes, since stock-pay deductions are often negligible in foreign countries.
Startup Roundup:
#StartupsEverywhere: Nashville, Tennessee. From its conception in 1999, the Greater Nashville Technology Council has been focused on bolstering the region’s entrepreneurial community by advocating for and supporting tech startups across Middle Tennessee. The member-based organization works with a variety of local stakeholders—including tech professionals, policymakers, and other state-based entrepreneurial organizations—to promote local workforce development and tech education initiatives.
Using technology to improve diversity, equity, and inclusion in the workplace. The World Economic Forum released a toolkit to help companies better utilize new resources and technologies in order to improve their diversity, equity, and inclusion initiatives.
