The Big Story: COVID relief talks stall as startups still wait for support. The Trump administration and Congress are continuing to discuss the framework of a bipartisan coronavirus relief package to support struggling small businesses and Americans, although the lack of progress on an agreement means that a stimulus deal is unlikely until after the presidential election on Nov. 3rd. With startups and small businesses in need of economic support to weather the pandemic’s economic uncertainty, entrepreneurs are calling for policymakers to provide more-targeted relief proposals in the much-needed stimulus package being discussed.
House Speaker Nancy Pelosi (D-Calif.) struck an optimistic tone yesterday when she said that Democrats are close to reaching a deal with the White House on another coronavirus relief package, although she cautioned that “it’ll take a while to write the bill.” But President Donald Trump cast doubt on an agreement being reached before Election Day, saying on Twitter that he didn’t see “any way” that Democrats would reach a compromise. And the Senate failed to pass a standalone measure this week that would, in part, have authorized $258 billion for a second round of Paycheck Protection Program (PPP) loans for small businesses after Democrats voted to table the proposal in favor of a more comprehensive relief package.
Despite bipartisan support for additional economic relief for small businesses and startups affected by the pandemic, policymakers for months now have been unable to reach an agreement—and entrepreneurs are running out of time for Congress to act. Engine conducted a survey earlier this month which found that a plurality (46 percent) need emergency assistance to keep their businesses open through the end of the year, with respondents saying that they would like to see policymakers offer additional economic relief proposals beyond PPP loans. While startups were able to utilize some of the billions in federal relief—including PPP loans—provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, the protracted COVID outbreak has forced many entrepreneurs to instead seek out long-term relief. As we found in our survey, startups believe that policymakers should pursue more targeted relief solutions in the next package, such as a designated “startup fund” to help direct relief to early-stage companies that have to compete for funding with more-established competitors, and more expanded forgivable loan programs.
Although a stimulus agreement seems unlikely to pass before next month’s election—and Americans and entrepreneurs remain in need of immediate support—policymakers should consider some of these startup-centric proposals if they want to ensure that any relief package provides long-term support for the entrepreneurial community.
Policy Roundup:
DOJ files antitrust suit against Google. The U.S. Department of Justice this week filed an antitrust lawsuit against Google over the tech giant’s supposed reliance on anti-competitive special agreements and contracts to control the majority of online search services in the United States. In a blog post responding to the lawsuit, Google said the DOJ’s actions “would do nothing to help consumers” and would instead “artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Business groups, universities challenge White House's effort to undermine visa programs. A coalition of business organizations and U.S. universities filed a lawsuit this week challenging the Trump administration’s recent efforts to restrict the H-1B visa program for high-skilled foreign workers. President Trump previously issued a proclamation suspending the issuance of visas to foreign-born talent, and the Department of Homeland Security this month also issued interim final rules that would substantially limit the number of eligible H-1B visa applicants. As we highlighted earlier this week, limiting companies’ access to foreign-born talent could make it more difficult for the U.S. to attract and attain talent.
Senate panel approves subpoenas for Twitter, Facebook CEOs. Republican members of the Senate Judiciary Committee voted yesterday to subpoena Facebook CEO Mark Zuckerberg and Twitter CEO Jack Dorsey to testify about their “suppression and/or censorship” of New York Post articles regarding Democratic presidential nominee Joe Biden’s son. Zuckerberg, Dorsey, and Google CEO Sundar Pichai are already scheduled to testify before the Senate Commerce Committee next Wednesday about Section 230 and allegations of online censorship. As we’ve noted, repealing Section 230 would have an outsized impact on the startup community that relies on the bedrock Internet law to moderate harmful user-generated content without the fear of crippling lawsuits resulting from their decisions.
Court sides with California in AB 5 challenge. A California appeals court this week said that Uber and Lyft must begin reclassifying their drivers as employees within the next 30 days. California sued the two ridesharing companies in May claiming that they were in violation of Assembly Bill 5 (AB 5), a measure that went into effect earlier this year requiring “gig economy” companies in the state to reclassify many of their independent contractors as employees. While AB 5 is ostensibly targeted at large California companies, the law could disproportionately harm early-stage startups that lack the resources to navigate the new compliance burdens, or the ability to determine how the new independent contractor definition applies to their own workforce. California voters will have the opportunity to weigh in on the law next month, after a group of companies was able to place a measure—Proposition 22—on the November ballot that would reclassify app-based drivers as independent contractors while also requiring companies to adopt alternative labor and wage policies.
White House completing regulatory guidance for AI technology. U.S. Chief Technology Officer Michael Kratsios said this week that the White House is finalizing guidance for federal agencies on how to regulate artificial intelligence, with the final recommendations expected “very soon.” The Trump administration previously released a draft of ten principles for AI regulation earlier this year designed to guide the development of private-sector technologies while eliminating federal overreach.
Startup Roundup:
#StartupsEverywhere: San Francisco, California. Nova Credit is a cross-border credit reporting company that allows immigrants to easily transfer their international credit histories to the United States. We recently spoke with Nicky Goulimis, Nova Credit’s Co-Founder and COO, to learn more about the startup’s work, the important role that immigrants play in the U.S. economy, and how policymakers can better support foreign-born workers and visa holders.
#EngineStartupSpotlight: Each Wednesday, Engine is spotlighting a different startup on social media to highlight the policy issues affecting their business. Read this week’s spotlight here, or reach out to us here to be featured.
