The Big Story: Online platforms in the spotlight over election claims. With temperatures running high over the election, Internet companies have found themselves again in the spotlight for their content moderation decisions, especially amid premature claims of victory and unsubstantiated claims about voter fraud.
Tech platforms—including Twitter and Facebook—announced prior to Election Day that they would be implementing new policies to defend against the spread of election misinformation, including by relying on trusted news outlets to call races and appending labels to posts that falsely or prematurely claim victory. Since the 2016 election, Internet companies spent billions of dollars improving their sites’ security and content moderation practices in order to prevent future election interference and the spread of misinformation around the election. This year, Internet companies have largely focused on pushing back against false claims of voter fraud and victory as ballots continue to be tallied across the country.
After President Donald Trump and his allies falsely claimed victory this week in the presidential election, Twitter and Facebook both labeled the president’s posts in order to let voters know that the presidential contest was still undecided. And claims from President Trump’s children and other political allies that election fraud tainted the results received warning labels on prominent social media platforms. Facebook also banned a group that organized protests at vote-counting centers in Arizona and Pennsylvania around the baseless theory that Democrats had “stolen” the election after some of the group’s members began sharing content in support of armed conflict.
These content moderation efforts come as policymakers attack the very law that lets Internet platforms host user-generated content and encourages them to moderate that content: Section 230. Early Friday morning, Trump tweeted that “Twitter is out of control, made possible through the government gift of Section 230!” The claim echoed unsubstantiated accusations from him and other Republican policymakers that Internet platforms unfairly moderate conservative content. But reforming Section 230, especially as envisioned by several Republican proposals, won’t change platforms’ legal ability to take down certain content, it will only make it more expensive to defend against meritless lawsuits. Section 230 is especially critical for early-stage startups that rely on the law’s safeguards in order to attract investments, scale, and grow. As policymakers evaluate Section 230, they need to take into account that content moderation is inherently expensive and imperfect, especially in an environment like the 2020 presidential election and even for some of the world’s largest Internet platforms.
Policy Roundup:
SEC raised crowdfunding cap to $5 million. The U.S. Securities and Exchange Commission voted this week to raise the limit on regulation crowdfunding from $1.07 million to $5 million, a move that will help expand investments opportunities for early-stage startups. The SEC said that the rule amendments would expand the pool of accredited investors to those who have proof of “financial sophistication,” and would allow startups to raise as much as $75 million from mini-public offerings. As we previously noted, raising capital is one of the most difficult tasks for nascent companies, and giving startups access to more crowdfunding investments will give them the financial support they need to grow.
California ballot measures a mixed bag for startups. California voters weighed in this week on two ballot initiatives with far-reaching ramifications for startups, entrepreneurs, and tech companies across the state. Voters approved Proposition 24, which would expand the scope of the California Consumer Privacy Act—the law that has effectively become the nation’s de facto privacy standard. The passage of another privacy ballot initiative in California after the CCPA took effect earlier this year is another reason Congress should pass a uniform privacy framework that protects users while also creating certainty for startups and entrepreneurs across the country. Golden State voters also approved a measure—Proposition 22—to permanently re-classify app-based drivers as independent workers, while also requiring companies to adopt alternative labor and wage policies for those “gig” workers. The measure was introduced after California passed a law that requires companies in the state to reclassify many of their independent contractors as employees, which would disproportionately affect startups who have to grapple with compliance burdens and questions about how the law’s independent contractor definition applies to their workforces.
Entrepreneurs say changes to H-1B visa program are hurting startups. Startup founders say that new rules from the Trump administration to further restrict H-1B visas will curtail their ability to access talented workers and grow their businesses. The H-1B program lets companies petition for the chance to employ high-skilled foreign talent. Last week, the Department of Homeland Security released a proposal to modify the H-1B visa lottery, instead awarding H-1B visas to applicants beginning at the highest salary on down. This proposed change to the H-1B visa program would effectively replace the current visa program. The new rules are likely to impact international students, information technology professionals, physicians, and others with less hand-on experience who could be shut out of obtaining H-1B visas. As we noted last month, however, startups and other tech firms rely on the contributions of high-skilled foreign workers. Some entrepreneurs have said that the new rules are forcing them to shift operations away from the U.S. in order to meet their workforce needs.
Engine asks Supreme Court to curtail doctrine that lets low-quality patents stand. Engine submitted an amicus brief to the U.S. Supreme Court this week asking the Court to reconsider the broad doctrine of “assignor estoppel,” which limits the ability of companies—especially startups—to challenge the validity of certain low-quality patents asserted against them. We noted in our brief that assignor estoppel not only protects invalid patents that can stand in the way of innovative startups, but also restricts employee mobility and harms other business activity across the startup ecosystem.
Startup Roundup:
#StartupsEverywhere: Fresno, California. BeeHero is an innovative startup that’s using sensors and machine learning to monitor the health of beehives and help farmers maximize their crop yields by tracking the pollination process. We spoke with BeeHero CEO and Co-Founder Omer Davidi to learn more about his startup’s work, how the pandemic has upended the farming industry, and why it’s important for policymakers to provide access to the capital startups need to reach consumers and hone their products.
Join us later this month for a conversation about capital access policy. Engine is hosting a webinar on November 18th at 4 p.m. ET to discuss access to capital policy and how startups can work with policymakers to drive solutions to capital access barriers. We will explore some of the challenges that startups face when accessing capital, the unique roadblocks faced by underrepresented founders, and how COVID-19 has impacted the startup community. RSVP here.
#EngineStartupSpotlight. Each Wednesday, Engine is spotlighting a different startup on social media to highlight the policy issues affecting their business. Reach out to us here to be featured.
