The Big Story: Congress talks online content, but startups are sidelined
As Congress continues the drumbeat of complaints about user-generated content on the Internet, the conversation misses the realities of content moderation and the role content moderation plays for startups.
Across multiple hearings on Capitol Hill this week, lawmakers expressed frustration around how large Internet companies host and moderate—either too much or too little, depending on who you ask—content created and shared by users. On Wednesday, the Senate Commerce subcommittee on consumer protection held a hearing on Instagram and young users. And on Thursday, the House Energy and Commerce subcommittee on consumer protection held a hearing on large technology companies that discussed online content, while the Senate Commerce subcommittee on communications held a hearing on how algorithms amplify content online.
But the conversations in D.C.—including those about potential changes to the intermediary liability framework that allows companies to host and moderate user content—is focused on the largest Internet companies. As we explained in research released this week, startups on bootstrap budgets invest a significant amount of time and resources into keeping their websites and services safe and relevant for their users; as they grow into mid-sized companies, the investment grows too. The intermediary liability framework created by Section 230 is an important foundation that enables Internet companies of all sizes—especially startups without hundreds of thousands of dollars to spend on litigation costs or in a doomed pursuit of “perfect” content moderation—to host content at all, and it empowers them to moderate content in ways that make sense for their users. Policymakers must keep startups in mind when considering changes to that crucial intermediary liability framework.
Policy Roundup:
Digital entrepreneurs and Internet policy debates. This week, we launched the Digital Entrepreneur Project to amplify the voices of the entrepreneurs who run small businesses that rely on the Internet. Current Internet policy frameworks are crucial for Internet-enabled entrepreneurs to make, sell, and share their content online, but the debate in Congress often focuses on large tech companies. The Digital Entrepreneur Project is an effort to remind policymakers that conversations about changing Internet policy should take into account the impacts those changes will have across the Internet ecosystem.
Startup community calls for preserving QSBS. Startups and small businesses are calling on the Senate to preserve the tax treatment of Qualified Small Business Stock (QSBS) as they consider the Build Back Better Act. The QSBS tax exclusion, which was expanded under President Obama and incentivizes investment in startups and supports startup formation, was essentially eliminated by the House-passed version of the bill. We recently signed a letter to urge Congress to preserve the tax treatment, because, as we’ve previously stated, curtailing QSBS would threaten the startup ecosystem and be antithetical to supporting the recovering American economy.
Rosenworcel confirmed to be FCC chair. In a 68-31 vote, the Senate confirmed Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel, extending her current term another five years and making her the first woman in history to hold that title. However, after a contentious hearing, FCC nominee Gigi Sohn is awaiting a committee vote on her nomination. As we explained in a recent blog post, Rosenworcel and Sohn have been key advocates for initiatives that support the startup ecosystem, and their confirmation is critical as the agency considers pro-startup priorities, including expanding broadband access and restoring net neutrality protections.
Tech in focus for competition policymakers. The EU competition chief was in the U.S. this week conferring with U.S. policymakers on proposals that could impact the startup ecosystem. On Tuesday, U.S. officials announced the EU-U.S. Joint Technology Competition Policy Dialogue in an effort to coordinate tech sector governance on both sides of the Atlantic. European Commissioner for Competition, Margrethe Vestager, later met with key legislators involved with proposals to drastically remake the U.S. tech ecosystem. Commerce Secretary Raimondo meanwhile called for EU policymakers to heed concerns about the EU’s legislation that would overhaul the tech sector with the potential to discriminatorily impact U.S.-based firms. While greater international cooperation can be a positive development, policymakers on both sides of the Atlantic should keep startups in mind as they consider proposals that would alter broad swathes of the startup ecosystem—from the services they rely on to build their products, to how they earn investment, to their ability to undergo a successful exit.
Bipartisan bill on crypto tax reporting introduced. This week Reps. Patrick McHenry (R-N.C.) and Tim Ryan (D-Ohio) introduced the Keep Innovation In America Act, which would amend the provisions in the infrastructure bill that require members of the cryptocurrency ecosystem to collect and report data on digital asset trades. The ecosystem needs clear regulations that don’t create unnecessary burdens for participants—including developers, minors, and validators.
Startup Roundup:
#StartupsEverywhere: New York City, New York. Maurice Ng is the Co-founder and General Partner of Tings Capital, a minority-owned venture capital fund based in New York City, N.Y. looking to invest in underrepresented founders, including people of color, women, LGBTQIA+, first-generation immigrants, and people with disabilities. Ng took the time to share his immigrant experience, his unique mission behind the firm, and some of the barriers marginalized communities face in the startup space.
