The Big Story: USMCA includes critical digital provisions. This week, Speaker of the House Nancy Pelosi (D-Calif.) announced that a deal was reached with the Administration, Canada, and Mexico on the U.S.-Mexico-Canada Agreement (USMCA) that includes digital provisions that will help startups grow their businesses abroad. Prior to this agreement, Speaker Pelosi indicated a desire to remove certain language in USMCA that echoes the intermediary liability protections found in U.S. law.
Critics of USMCA's Article 19.17 and Section 230 of the Communications Decency Act—which shields Internet startups from facing possibly ruinous legal liability for hosting user-generated content or for removing potentially objectionable content—argued that including these provisions in trade agreements is simply a "gift" for big tech. As Engine noted in a recent blog post, however, these protections have existed in U.S. law for more than two decades and are integral to the long-term survival of Internet platforms of all sizes, especially startups who want to grow and compete with large tech companies.
Many startups launch with limited capital, often from personal and family savings or bank loans. One frivolous lawsuit related to user-generated content is often enough to bankrupt a new venture. While larger Internet platforms also benefit from intermediary liability protections, these platforms are also able to hire thousands of content moderators and employ costly algorithms to weed out problematic content. Startup platforms generally do not have the budgets for these measures. Including Section 230-like language in USMCA is not a boon for big tech, but is instead an important and necessary tool in a startup's toolbox that allows them to grow in an increasingly connected world.
Policy Roundup:
Weakened encryption would hurt startups, consumers. Lawmakers on the Senate Judiciary Committee pushed for tech companies to provide law enforcement officials with access to encrypted user data during a hearing this week, despite the risks that intentional vulnerabilities would have on consumer security. As we noted earlier this week, startups would be significantly impacted by weakened encryption standards because they don’t have the long-standing reputation or consumer base to withstand a loss of trust that would come from creating intentional security vulnerabilities in their products.
DOJ examining Section 230 protections. Attorney General William Barr said in a speech to state law enforcement officials the the Department of Justice is reviewing Section 230 protections for online platforms as part of the department’s ongoing review of large tech companies.
CCPA enforcement will be guided by efforts to comply. California Attorney General Xavier Becerra said his office is not planning to extend the Jan. 1 deadline for businesses to comply with the California Consumer Privacy Act—the state’s new digital privacy law—but added that “we will look kindly on those that ... demonstrate an effort to comply” with the law’s new requirements.
Global financial regulators concerned about tech’s finance push. The Financial Stability Board—an international body of financial regulators—released a report Sunday that called for “vigilant monitoring” of tech companies’ move into the financial services sector and suggested requiring large tech companies to share customer data with banks and fintech companies to prevent unfair competition.
WTO temporarily extends ban on digital trade tariffs. Members of the World Trade Organization agreed to temporarily renew a moratorium on tariffs on digital trade for six months after the WTO’s current 20-year moratorium was set to expire this month.
Spreading tech innovation across the U.S. The Brookings Institution and the Information Technology and Innovation Foundation released a report this week proposing ways to better spread tech innovation hubs more evenly across the country.
Startup Roundup:
#StartupsEverywhere: Chesterfield, Mo. IncentiLock, a St. Louis County-based startup, is working to ease the incentive headache for startups and governments alike by offering software to automatically calculate tax credits and incentive benefits. We recently spoke with Jane Vancil, IncentiLock’s founder and CEO, to learn more about the company and Missouri’s startup ecosystem.
