The Big Story: Congress must keep startups in mind while reviewing the DMCA. The House Judiciary Committee held a hearing this week about § 512 of the Digital Millennium Copyright Act (“DMCA”)—a critical area of the law for startups which provides a balanced and certain framework for addressing allegations of online copyright infringement. As we have explained, if Congress were to consider any revisions, it is essential they carefully weigh how important § 512 is to startups. While much of the Committee’s hearing ignored those needs, there were indications some lawmakers and witnesses are still mindful of startups and the users and Internet-enabled creators who rely on them.
Section 512 embodies a carefully-crafted balance which remains valuable, providing certainty that is especially relevant to today’s startups. It lays out the notice-and-takedown and safe harbor framework, so startups that comply with provisions of § 512 are not automatically liable for alleged infringement by their users which they have no involvement in or knowledge of.
This week’s hearing addressed a recent report from the Copyright Office, which unfortunately suggested changes in the law that would substantially alter the current balanced framework and make it much riskier for startups and small service providers to host user-generated, creative content. Most of the hearing was consistent, as lawmakers appeared to agree a change may be warranted—partially motivated by “techlash”—and expressed lopsided interest in the concerns of certain, traditional copyright owners. That mindset is alarming, because, as we detailed in our comments to the Judiciary Committee, any changes to § 512 could have an outsized and negative impact on startups and smaller service providers.
While much of this week’s hearing seemed to focus on large platforms and traditional rightsholders, there were indications that some lawmakers are continuing to consider the needs of startups and the Internet users and Internet-enabled creators who rely on them. Rep. Stanton acknowledged that changes to § 512 could create barriers to entry, noting that “uncertainty due to changes in the law, not being able to afford litigation on copyright infringement, can cause new and smaller businesses not to compete altogether.” Likewise, one of the witnesses, Jonathan Band—Counsel for the Library Copyright Alliance—explained how adopting changes from the Copyright Office’s report could have serious unintended consequences. Even purportedly “minor” changes could amount to a de facto requirement that all companies deploy filtering technology to identify potential infringement—a requirement that would not be a big problem for larger platforms, “but for smaller platforms it would be a very serious issue.” In the same vein, another witness, Public Knowledge Policy Counsel Meredith Rose correctly noted that the impulse to legislate based on what larger platforms can do—for example, requiring all service providers to affirmatively search and filter for allegedly infringing content—would “create unfair or unreasonable expectations for smaller websites . . . that host user generated content.”
It is unclear whether or how Congress may proceed with any modification to § 512, but hopefully lawmakers will keep startups in mind, and preserve the current balance and certainty in the law that enables nascent companies to launch, grow, and thrive.
Policy Roundup:
White House, GOP lawmakers push for probe of Section 230. The Trump administration is reportedly pushing Senate Republicans to scrutinize Section 230—a bedrock Internet law that allows Internet platforms to host and moderate user content—ahead of the November election. President Donald Trump and Republican lawmakers have proposed policy changes backed by unsubstantiated claims that social media platforms unfairly censor conservative users, especially after Twitter fact-checked several of the president’s misleading tweets about mail-in ballots in May. As we noted earlier this week, changing Section 230 on politically-motivated grounds—including by passing a bill currently in front of the Senate Judiciary Committee—would have a crippling impact on the ability for nascent startups to moderate user content in a way that best serves their users and communities.
Senate panel votes to subpoena tech CEOs for Section 230 hearing. The Senate Commerce Committee unanimously voted yesterday to subpoena the CEOs of Facebook, Google, and Twitter to testify before the panel at a hearing on Section 230 and other issues later this month. Although the committee’s top Democrat, Sen. Maria Cantwell (Wash.), initially called the threat of subpoenas a “partisan effort” driven by unsubstantiated claims of online censorship, Cantwell and other Democrats supported the effort after GOP members added language about privacy and media domination to the subpoenas.
Despite lack of startup input, House antitrust panel readies competition report. The House Judiciary antitrust subcommittee is reportedly planning to release its report on alleged anti-competitive practices by Amazon, Apple, Facebook, and Google as soon as Monday. Although policymakers have raised understandable questions about the practices of big tech firms over the course of their investigation, the lack of input from the startup community on a host of issues discussed by the subcommittee—including acquisitions and content moderation—means that lawmakers could propose broad policy measures that could further cement the power of the largest tech firms. As we previously noted, ill-conceived policies meant to promote competition have historically backfired, underscoring the need for policymakers to understand the impact that their potential legislative solutions would have on the broader tech industry—not just the largest players.
Digital services taxes will raise costs for U.S. startups, users. Dozens of countries have proposed—or have already implemented—digital services taxes (DSTs) targeting large U.S. tech companies, but the impact of these levies is likely to be passed on to startups and users in the form of increased costs for services. In a new blog post, we examine the impact DSTs have on startups, and the steps federal officials should take to fight back against these discriminatory taxes as they continue to engage with global trading partners.
CFIUS scrutinizing startups over Chinese investments. The Committee on Foreign Investment in the United States (CFIUS) has sent inquiries to dozens of U.S. tech startups requesting information on Chinese investments in their companies. CFIUS is reportedly looking at startups and apps that have received funding from Chinese venture capital firms and investors and collect user data, as well as companies specializing in technology that is considered crucial for national security interests.
House passes $2.2 billion relief bill after negotiations falter. After failing to reach an agreement with the White House on a new coronavirus stimulus package, House Democrats passed a $2.2 trillion relief bill last night that would in part authorize more funding for a second round of Paycheck Protection Program loans. The legislation, however, is unlikely to advance through the GOP-held Senate. House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin held discussions this week about the framework of another coronavirus relief bill, although Pelosi told House Democrats that she was not optimistic about reaching a deal with the Trump administration.
Startup Roundup:
#StartupsEverywhere: Owings Mills, Maryland. Dr. Edouard Siregar, a former researcher with NASA, founded Sofia Labs as a way of using human-centered artificial intelligence to help users lighten their workloads and finish complex projects. We recently spoke with Dr. Siregar to learn more about his company’s product, what policymakers should do to support startups affected by the pandemic, and how the government can best advance emerging technologies.
