The Big Story: Messy ‘Big Tech’ hearing fails to address startup competition. Big tech CEOs were in the hot seat this week during a House antitrust hearing ostensibly about anti-competitive practices. Instead, however, lawmakers used the opportunity to air a variety of grievances against large tech firms without offering a coherent plan for policymaking that could benefit the U.S. startup ecosystem. While some of the members of the House Judiciary Antitrust Subcommittee used Wednesday’s hearing with the CEOs of Amazon, Apple, Google, and Facebook to address startup concerns, the hearing clearly demonstrated that policymakers need to rethink their approach to competition policy by listening to the concerns of the entrepreneurial community if they truly want to support startup growth and innovation.
While the House antitrust panel has been leading a yearlong investigation into allegations of anti-competitive practices by the largest tech firms, the hearing featured an array of often absurd criticisms about the tech companies, from demands that tech firms take military contracts to complaints about how spam filters work. And many Republican lawmakers used the opportunity to criticize the CEOs for their alleged anti-conservative bias, adding fuel to some lawmakers’ efforts to force Internet platforms to be “politically neutral” in their moderating efforts.
Some lawmakers, such as Rep. Kelly Armstrong (R-N.D.), used the hearing to rightfully note that tech policies designed to rein in the largest tech firms—such as the European Union’s sweeping data privacy rules, known as the General Data Protection Regulation (GDPR)—often end up hurting their smaller competitors the most. And while several members pressed the witnesses on allegedly anti-competitive acquisitions, they failed to address the potentially negative impact a ban on such acquisitions would have on the startup sector. Ultimately, discussion of startup-focused concerns was disappointingly sparse during a hearing that was billed as an examination of competition in the tech sector.
It’s clear that policymakers can’t agree on their criticisms of big tech, much less solutions for promoting startup competition. As Evan Engstrom, Engine’s Executive Director, noted in an InsideSources op-ed last week, “policymakers across the globe have fallen into the trap of regulating big tech in the name of fostering startup competition—usually with counterproductive results.” Without reaching a clear consensus about policies that will drive competition and innovation, U.S. lawmakers are poised to pursue similarly counterproductive European-style measures—such as GDPR and the controversial Article 17 measure to address copyright complaints—that end up harming startups. If lawmakers want to effectively promote tech competition, then they should do so in conjunction with the startups and entrepreneurs who would be most affected by their proposals.
Policy Roundup:
White House, lawmakers reviewing content moderation practices. The Trump administration this week petitioned the Federal Communications Commission to regulate online platforms’ content moderation practices, a move that came after President Donald Trump issued an executive order in May to prevent “online censorship” that directed federal agencies to review the meaning of “good faith” moderation. The move is the latest attempt by the White House and some federal lawmakers to target a bedrock Internet law—Section 230 of the Communications Decency Act—that provides companies of all sizes with liability protections when it comes to hosting and moderating user-generated content on their platforms. Members of a Senate subcommittee also held a hearing on the law this week focusing on Section 230 and consumer protection and illegal content.
What does "otherwise objectionable" mean? Policymakers are also continuing to debate the meaning of the term “otherwise objectionable” in Section 230 of the Communications Decency Act, with some officials pushing for the term’s reach to be narrowed to only illegal and terroristic content. As some experts have noted, however, the term is especially crucial for platforms that want to moderate problematic—though still legal—content on their sites, and forcing digital platforms to host “lawful but awful” content would allow hate speech, misinformation, and election meddling campaigns to run rampant across the Internet.
Copyright Fair Use & the DMCA. This week the Senate Judiciary IP Subcommittee held a hearing about fair use and the Digital Millennium Copyright Act (“DMCA”). Engine submitted a letter to the Subcommittee, explaining how balanced copyright laws—like fair use and the DMCA—benefit startups and their users and creators, who can rely on these doctrines to share new innovations and creations without having to constantly worry about potentially ruinous litigation.
Survey finds startups prefer “best practice” framework for reopening safely. As Congress debates what to include in the next coronavirus relief package, some policymakers have discussed including some form of liability protection for businesses. Engine conducted a survey of our startup network this month to find out whether or not startups believe that liability protections are necessary for them to safely reopen. While a majority of startups surveyed are concerned about being held liable if their employees or customers contract the virus, companies were mixed on whether the next relief package must include liability protections in order for them to reopen safely.
EU won't offer a grace period for firms affected by Privacy Shield ruling. The European Union’s data watchdog warned that there will be no regulatory grace period for companies impacted by a European court ruling earlier this month that struck down the EU-U.S. Privacy Shield, an agreement which allowed U.S. companies to store and process European users’ data in America. In a letter yesterday to Commerce Secretary Wilbur Ross and top EU officials, a coalition of U.S. and European businesses called on the leaders to quickly negotiate a new transatlantic data agreement in order to mitigate the economic fallout of the decision. If you’re a startup that has been impacted by the decision to strike down Privacy Shield, please contact us here.
Tech sector criticizes White House’s DACA announcement. The Trump administration’s announcement this week that it would limit renewals for the Deferred Action for Childhood Arrivals (DACA) program was met with condemnation from the tech sector, which highlighted the significant contributions that the 800,000 Dreamers—young people who were brought to this country as children—have made to the U.S. economy. The administration’s latest move comes a month after the Supreme Court blocked President Donald Trump’s rollback of the Obama-era program.
Startup Roundup:
#StartupsEverywhere: Pine Bluff, Arkansas. Go Forward Pine Bluff (GFPB), a non-profit organization, is working to improve education, local government, infrastructure, quality of life, and economic development in the city. The organization created an innovation hub, known as The Generator at Go Forward Pine Bluff, in 2017 to improve the digital skills of entrepreneurs, improve the city’s lagging broadband access, and support the long-term success of small businesses.
