The Big Story: Congressional Startup Day underscores importance of startups in policymaking
This Wednesday marked Congressional Startup Day 2024 with members of Congress across the country celebrating entrepreneurship and the contributions of their startup constituents. Startups in every state and district throughout the U.S. create jobs, advance innovation, and drive economic growth in their communities, but also face myriad challenges along the way. Congressional Startup Day provides an opportunity for Members of Congress to take stock of the startups they represent and the policies needed to support these businesses and strengthen the startup ecosystem.
It is important for Members of Congress to recognize the needs and perspectives of startups as they work to craft policy. Key issues that policymakers are working on directly impact startups and their ability to succeed, from tax policies impacting research and development, to digital trade, to capital access, to child care support, to policies impacting access to talent, as we highlighted throughout the week.
By ensuring startups have a voice in the policy debates, policymakers can help U.S startups grow and thrive. The U.S. economy continues to rely on the ingenuity and resilience of startups, with over 33.3 million small businesses and startups in the U.S. employing nearly 45.9 percent of the workforce. As Congress returns to Washington, D.C. next month, the celebration of Congressional Startup Day should serve as a strong reminder of the roles that startups and entrepreneurs play nationwide, and members should be eager to champion the needs of the startups they represent.
Policy Roundup:
Controversial California AI legislation advances, teeing up floor vote. On Thursday, California Senate Bill 1047—broad legislation to regulate AI development—passed out of committee and is likely to pass out of the legislature before it adjourns at the end of the month. Earlier on Thursday, eight Democratic U.S. representatives from California wrote to Gov. Gavin Newsom (D) outlining their serious concerns with the bill and encouraging him to veto the legislation should it pass in its current form. While the bill did pass committee with some amendments to scope, the bill still threatens AI development in California and the startup ecosystem, and California legislators should not pass it.
AI copyright lawsuits progress, outcomes poised to impact startups. On Monday, a federal judge ruled to advance questions of copyright infringement in a class-action lawsuit against AI companies including Midjourney and Stability AI. The case, brought by artists alleging infringement of their copyrighted works, could establish new standards for AI and copyright law, directly affecting how startups innovate with AI technology. In a blog post this week, Engine explores litigation against AI companies alleging copyright infringement, highlighting how startups could face increased legal risks and operational challenges if copyright law evolves to restrict the ingestion of copyrighted material for AI model training. To maintain an AI ecosystem that is innovative, competitive, and accessible to startups, courts should recognize the ingestion of copyrighted content into training data to be lawful and noninfringing.
Report reveals borrower struggles post-payment pause. This week, a U.S. Government Accountability Office (GAO) report highlighted significant challenges faced by federal student loan borrowers after payments resumed in October 2023 following a pandemic-related pause. The report shows that nearly 30 percent of borrowers are past due on their payments, representing about $290 billion in outstanding loans. With many borrowers struggling to stay current, the report’s findings underscore the need for policymakers to craft solutions to address student debt, which disproportionately affects underrepresented groups and hinders entrepreneurship.
Federal agency issues final rule banning fake reviews. This week, The Federal Trade Commission announced a final rule prohibiting fake reviews and testimonials, aiming to curb deceptive advertising practices. While the rule will have an impact on early-stage startups that rely upon customer testimonials to build trust, the rule will also impact Internet creators that offer product reviews and are often compensated for them. Creators could be impacted by several factors outlined by the rule, including those related to compensation, experience with the product, and the authenticity of followers.
