The Big Story: New Senate privacy bill misses the mark for startups. A group of Senate Democrats this week unveiled a data privacy bill that would codify heavy-handed rules governing how companies collect, store, and utilize consumer data and could open companies up to bad faith lawsuits, creating unmanageable costs for startups.
The bill includes a private right of action, which could allow for a deluge of lawsuits against startups by allowing consumers to sue companies over violations of the law. We previously explained how a private right of action could embolden bad actors to target startups by allowing them to file “meritless claims in order to force small companies to pay settlements.”
The bill also fails to replace inconsistent state laws with one strong federal set of privacy rules. Without preemption, a new federal privacy law simply adds to the likely growing set of requirements and penalties that vary across state lines. As we wrote in a recent blog post, with several states looking to follow California in enacting their own privacy laws, even rules that appear at first glance to be the same have small differences that could account for huge compliance costs.
Startups stand the most to lose in the privacy debate, and Engine has advocated for a law creating a strong, uniform set of federal privacy rules that protect users, shore up consumer trust in the Internet ecosystem, and create predictable compliance requirements for companies. It's unfortunate that these lawmakers introduced this bill instead of working on a bipartisan basis toward rules that work for consumers and startups. We hope lawmakers take the opportunity to discuss crafting strong privacy legislation during next week's Senate Commerce Committee hearing on “legislative proposals to protect consumer data privacy."
Policy Roundup:
Companies taking steps to combat deepfakes. Researchers at Google and other Internet companies are using artificial intelligence technologies to better detect digitally manipulated videos known as deepfakes.
Private equity firm buys .org domain. Private equity firm Ethos Capital purchased the .org domain from the Public Internet Registry, a move that came after ICANN eliminated price protections for nonprofit domain owners in June. Ethos said in a statement it is “committed to keeping .ORG accessible and reasonably priced for all.”
EU court hears copyright infringement case. The European Union’s supreme court heard arguments yesterday in a case examining whether YouTube should be held legally responsible for infringing content uploaded by users. The case was brought before the European Parliament passed a controversial copyright directive earlier this year that in part requires platforms to use expensive content moderation tools to remove infringing content.
Beijing announces plans for stronger IP protections. The Chinese government on Sunday released new guidelines for improving intellectual property rights, including stricter enforcement of IP laws and levying stronger penalties against infringers.
Progress continues on USMCA agreement. Speaker of the House Nancy Pelosi (D-Calif.) said that House Democrats and the Trump administration “are within range of a substantially improved agreement” on the USMCA trade deal, although she added that “we need to see our progress in writing” from U.S. Trade Representative Robert Lighthizer before moving forward.
Startup Roundup:
#StartupsEverywhere: Cincinnati, Ohio. Refinery Ventures, a venture capital firm based in Cincinnati, is working to build and encourage entrepreneurship across the country—especially the Midwest. Tim Schigel, Refinery Ventures’ managing partner, took the time to speak with us recently about the firm and venture capital.
VC industry reconsiders approach after unicorn failures. The downfall of several once-profitable unicorns over the past year has caused the venture capital industry to grow more leery of financial investments and deals, despite the fact that the startup industry remains economically strong.
