The Big Story: New net neutrality bill would benefit startups
Lawmakers are restarting the stalled conversation around net neutrality, the idea that Internet service providers (ISPs) shouldn’t be able to charge websites and online services—including those run by startups—for better, faster access to their users. This week, Sen. Ed Markey (D-MA) and Sen. Ron Wyden (D-OR), introduced the Net Neutrality and Broadband Justice Act—a bill that would reclassify broadband to give the Federal Communications Commission (FCC) authority to regulate ISPs, including on net neutrality.
The bill is the latest move in a long running debate over net neutrality. In recent years, the FCC has written multiple versions of net neutrality rules meant to keep ISPs from blocking or slowing certain Internet traffic or charging websites and online services for faster delivery of their traffic to their users. After the agency’s attempts were overturned in court, the FCC voted in 2015 to reclassify broadband as a Title II service, putting ISPs in a more highly regulated category and giving the agency authority to write strong net neutrality rules. That decision and those net neutrality rules were repealed by the Republican-led FCC in 2017. The new bill from Markey and Wyden would classify Internet access as “an essential service” and reinstate the FCC’s authority.
As Engine has long stated, net neutrality protections benefit the startup ecosystem as startups across the country rely on a free and open Internet to reach their users and grow their businesses. And the pandemic has only heightened the need for access to the open Internet, as more startup founders, employees, and users are relying on the Internet for work, education, healthcare, and more. If ISPs started charging websites and online services for better access to their users, startups on bootstrap budgets would be ill-equipped to pay, as compared to their larger competitors. Policymakers in Congress and at the FCC should prioritize telecom proposals, including around net neutrality as well as broadband affordability and accessibility, to ensure startups are able to launch, grow, and compete.
Policy Roundup:
CHIPS bill advances Senate. The Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act passed the Senate and House this week, meaning it’s on it’s way to President Joe Biden’s desk for signature into law. The bill would provide support to the semiconductor industry as well as funding for things like wireless deployment, the National Science Foundation, and STEM education initiatives.
FTC sues to stop startup acquisition. The Federal Trade Commission (FTC) this week sued to stop Meta from acquiring a virtual reality startup. Meta announced last October that they intended to acquire Within for a reported $400 million. The lawsuit—which was authorized by a party-line 3-2 vote and contradicts the recommendation of FTC staff—has been met with criticism from across the tech sector, given the implications for startup acquisitions more broadly. Acquisitions provide incentives to innovate and promote the flow of capital and talent startups need to flourish, and the FTC’s suit sends a threatening signal that could make other companies rethink similar planned transactions.
Judge orders more balanced distribution of patent cases in Texas courts. Any new patent lawsuits filed in Waco, TX will now be randomly assigned to one of twelve judges in the Western District of Texas—a change in policy that will prevent plaintiffs from picking one patentee-friendly judge to hear their cases. This comes after a rapidly growing number of patent suits in Waco, many filed by patent assertion entities, has driven up the amount of abusive patent litigation in the U.S. and decreased confidence in our patent system. This week’s order is one example of how the federal judiciary can promote balanced enforcement of high-quality patents and protect startups across the country from certain abuses.
How the EU’s Digital Services Act will impact U.S. startups. Policymakers in Europe recently advanced sweeping legislation that will change how Internet companies, including U.S. startups, operate in Europe. In a new blog, Engine explains what the European Union’s Digital Services Act (DSA)—which will govern an array of digital services, especially those that host or encounter user content and those that serve or use digital ads—will mean for startups operating there. Once the law is in force (following a few remaining legislative steps) it will likely heighten barriers to serving the EU market through new obligations for companies serving EU users, restrictions on some current practices, and increasing the resources needed to serve the EU market.
Senate commerce committee advances kids Internet bills. This week, the Senate Commerce Committee approved two bills that would change how Internet companies deal with child and teenage users: the Children and Teens’ Online Privacy Protection Act (CTOPPA) and the Kids Online Safety Act (KOSA). CTOPPA would update the Children Online Privacy Protection Act to extend existing privacy protections to young teen users and create new obligations for companies with young users. Some Republican members of the committee said they supported the overall goal of the bill but ultimately voted against the legislation, expressing concerns about the scope of the FTC’s authority under the bill. KOSA would create new rules for social media platforms, including having them identify young users and then keep those users from seeing certain kinds of harmful content and a requirement that companies create parental controls to limit how young users can use their services.
Startups waiting for SBIR reauthorization. As the Small Business Innovation Research (SBIR) program approaches its September deadline for reauthorization, key legislators continue talks to ensure a future for the program. The SBIR program—which remains a major source of funding for many startups engaged in R&D—is facing threats of expiration as some, including Senator Rand Paul (R-KY) who alleges SBIR investments do not oftentimes result in a marketable product, therefore, not worth tax investment. But SBIR advocates, backed by multiple studies, object, arguing that the program leads to high rates of commercialization. While there are areas ripe for reform—including bringing more diversity to the program and improving the application and approval process so that it better suits a startup’s life cycle—it is critical the program is reauthorized.
Startup Roundup:
#StartupsEverywhere: New York, New York. PILOT’s virtual HR platform is designed to help organizations boost employee engagement, build better workplace relationships, and create a business culture that empowers employees. Founder & CEO Ben Brooks spoke with us about his company, his experience with startup incubators, and how he believes privacy legislation can impact the startup ecosystem.
