The Big Story: In order to promote tech competition, Congress needs to hear from startups. While a planned House antitrust panel next week featuring the CEOs of Amazon, Apple, Google, and Facebook has reportedly been postponed, the startup community is still paying close attention to ongoing congressional discussions about allegations of anti-competitive practices by the country’s largest tech firms. Recent history has shown that efforts to combat the perceived dominance of a few tech firms often have counterproductive outcomes, and policymakers need to factor the U.S. startup community into their work moving forward.
Members of the House Judiciary Antitrust Subcommittee have been leading a yearlong congressional investigation into claims that “big tech” companies have been stifling the growth and reach of their smaller competitors—including allegations that these firms are using their dominance in online advertising, social media, and product marketing to sideline competition. But lawmakers’ intense focus on claims of anti-competitive practices by the largest tech companies could be clouding their ability to effectively legislate solutions that will not harm nascent competitors. By solely focusing on criticisms of “big tech”—and doing so without the necessary input from the startup community—Congress is running the risk of harming competition in the effort to promote it.
As Engine’s Executive Director, Evan Engstrom, pointed out in an InsideSources op-ed this morning, “policymakers across the globe have fallen into the trap of regulating big tech in the name of fostering startup competition—usually with counterproductive results.” European efforts to regulate data privacy through the General Data Protection Regulation (GDPR) and copyright complaints through the controversial Article 17 measure have imposed regulatory burdens that can be met only by the largest companies. And criticisms that mergers and acquisitions are inherently anti-competitive often ignore the fact that these types of deals generally involve a financially secure firm purchasing the assets of a failing startup that would otherwise go out of business.
As U.S. lawmakers continue looking into concerns about competition, they need to be mindful of regulations that only increase big tech's market share, by creating an unmanageable regulatory environment for smaller competitors. Instead, Congress must carefully approach big tech regulation by working hand-in-hand with members of the startup ecosystem who are uniquely positioned to understand how proposed regulations and policies will actually impact competition.
Policy Roundup:
How is the Privacy Shield rollback affecting startups? After the European Court of Justice struck down the EU-U.S. Privacy Shield last week, startups and digital firms that operate across the European Union have been growing increasingly concerned about the need to reach a new transatlantic data transfer pact. If you’re a startup that has been impacted by the decision to strike down Privacy Shield, please contact us here.
Business groups file lawsuit over suspension of H-1B visas. The U.S. Chamber of Commerce, the National Retail Federation, and other large U.S. business groups filed a lawsuit against the Trump administration this week over the White House’s decision to temporarily suspend visas for high-skilled foreign workers, including those under the H-1B program. Earlier this month, Engine led a group of 118 startups, entrepreneurial organizations, and companies—including GitHub and Twitter—in a letter to President Donald Trump that called on his administration to reconsider its visa suspension because of the significant contributions that high-skilled foreign workers make to emerging tech firms. And, as the Wall Street Journal recently noted in an editorial, reports show that efforts to restrict the flow of talented workers to the U.S. drives tech innovation and resources to other countries.
Senate panel continues review of DMCA. The Senate Judiciary Subcommittee on Intellectual Property is holding a hearing next Tuesday about fair use and the Digital Millennium Copyright Act (DMCA)—the 1998 law that provides companies with a framework for addressing accusations of copyright infringement online. The DMCA’s balanced framework is valuable to growing startups, and even minor changes to the law could create unreasonable burdens on the U.S. startup community.
Senate panel plans hearing on PACT Act. The Senate Commerce Subcommittee on Communications, Technology, Innovation, and the Internet is holding a hearing next Tuesday to discuss the Platform Accountability and Consumer Transparency (PACT) Act—legislation from Sens. John Thune (R-S.D.) and Brian Schatz (D-Hawaii) that would require Internet firms to remove illegal content from their platforms within 24 hours and be more transparent and responsive when it comes to their content moderation practices. The bill is the most recent attempt to change Section 230 of the Communications Decency Act, the 1996 law that has allowed startups and digital services that host user-generated content to grow.
G-20 members hopeful of digital tax deal. Global regulators said in a recent communiqué that they planned to reach an international deal on digital services taxes (DSTs) before the end of the year. The group of G-20 finance ministers and central bankers, which released the document following a meeting this past weekend, said they expected the Organisation for Economic Co-operation and Development (OECD) to have the framework for a digital tax deal together before their October meeting. Although the U.S. threatened to pull out of the ongoing OECD talks meant to reach an agreement on DSTs—which countries have been using to target large U.S. Internet companies—U.S. officials are reportedly still engaged in talks to reach a tax deal.
Startup Roundup:
#StartupsEverywhere: Denver, Colorado. PAIRIN, a startup based in the Mile-High City, is using the power of entrepreneurship to help people across the U.S. who have been displaced by the economic uncertainty caused by the COVID-19 outbreak. The startup’s platform, which utilizes AI and personal soft skills assessments, helps users connect with workforce development and educational opportunities that they need to enhance their lives—inside and outside the workplace.
