In a series of State Policy Updates, we are exploring how state initiatives are impacting the innovation happening in startup ecosystems across the country.
Controversial California legislation threatens AI innovation
Terrament's journey began with a commitment to enhancing sustainable energy solutions and a desire to overcome the limitations of traditional energy storage methods. By leveraging shaft-digging technology from the mining industry, Terrament developed an innovative approach to replicate the energy storage capabilities of pumped hydro without needing mountains or water. We chatted with Founder Eric Chaves about how policymakers can support startups in the energy and climate space, the importance of government grant programs, and his vision for the future.
To help policymakers better understand what these issues mean for startups and their users, we’re releasing an updated version of the report, one-pager, and video explainers of the impacts of age verification and the policy proposals that prompt it.
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.
The Big Story: Startups watch as Congress considers tech nominees. This week, Senate committees weighed in on several individuals President Joe Biden nominated to key tech leadership roles, shedding some light on the direction the nominees might take to support startup innovators. In a series of hearings, Senators considered acting Federal Communications Commission (FCC) Chair Jessica Rosenworcel and FCC nominee Gigi Sohn, as well as Alan Davidson, who was nominated to lead the National Telecommunications and Information Administration (NTIA), Federal Trade Commission nominee Alvaro Bedoya, and Kathi Vidal, who was nominated to lead the Patent and Trademark Office.
The Big Story: Making the startup ecosystem more equitable. Startup founders with innovative ideas should have the chance to succeed, no matter where they’re located or what they look like. But too often, underrepresented founders—including women and founders of color—are denied the opportunity to get investments, launch, and grow. This week, Engine released an assessment of barriers that underrepresented founders face as well as policy proposals to alleviate those barriers.
The Big Story: Immigration in play in reconciliation bill, but path unclear. As the House eyes a path forward on the reconciliation bill, newly-added language would create temporary protections for millions of undocumented immigrants, which could make it easier for foreign-born innovators, founders, and STEM talent to stay and work in the U.S.
The Big Story: Biden puts up key tech, telecom nominees. This week, President Biden announced several long-awaited nominations that, if confirmed, will serve key roles in setting technology and telecom policies that impact the startup ecosystem.
The Big Story: Policymakers turn attention to patent policy. Over the past weeks, there have been several indications policymakers across D.C. are thinking about the various roles patents play in innovation policy—both recognizing their potential to support innovators but also seeking to understand how low-quality patents hurt startups and small businesses.
The Big Story: New tax deal could impact global startup ecosystem. Officials from around the world are moving forward with a new tax deal that would shift current tax laws and stands to impact both large companies and startups. G20 Finance Ministers this Wednesday endorsed the agreement that 136 countries agreed on last week, which would tax businesses based on where their goods and services are consumed—a shift from taxation based on physical presence. The deal would also set a new global minimum tax of 15 percent.
The Big Story: Congress hears about startups’ need for clear data rules. Lawmakers have turned back to discussions of a federal privacy framework, including at a hearing this week on data security, which featured testimony from Engine focused on how startups need clarity and certainty around data security practices.
The Big Story: SHOP SAFE bill advances despite potential to harm e-commerce startups and small businesses. In a first vote this week, the House Judiciary Committee advanced the SHOP SAFE Act, a bill that would create substantial costs and risks for e-commerce startups—making it harder for them to compete—and erect new barriers for entrepreneurs and small businesses who want to sell goods online.
The Big Story: Congress hits roadblock on immigration reform
A potential pathway to citizenship for Dreamers—a group critical to the startup ecosystem—was derailed this week when the Senate Parliamentarian blocked Democrats’ efforts to include immigration reform in the $3.5 trillion reconciliation bill. Many Dreamers are entrepreneurs, and, as a group, they employ over 86,000 individuals across the country. Legislators are now considering alternative proposals to ensure immigration provisions remain a priority.
The Big Story: G7 tax deal reached, but faces uncertainty in U.S. Congress. This week, the finance leaders of the G7 countries came to an agreement on a global minimum corporate tax rate of at least 15 percent, which could hinge on the withdrawal of unilateral digital services taxes that disproportionately impact U.S. tech firms. The deal, which comes after years of negotiations in an effort to revamp international taxation, represents a first step in redrafting the rules in how multinational corporations are taxed.
The Big Story: Transatlantic data deal a priority ahead of U.S.-EU summit. Ahead of the U.S.-European Union summit later this month, President Joe Biden is renewing the administration’s focus on negotiating a new deal to let U.S. companies, especially startups, that operate in Europe store and process EU users’ data in the U.S. The two governments must address policy-related obstacles to transatlantic digital trade, including the invalidation of the last data flow deal as well as likely impacts from other EU proposals around digital taxes, artificial intelligence, and online platforms and marketplaces.
The Big Story: States push ahead on privacy in lieu of federal action. Virginia officially became the second state in the nation—following California—to implement its own comprehensive data privacy law last week. The passage of Virginia’s privacy law comes as other states—including Minnesota, New York, Oklahoma, Utah, and Washington—consider implementing their own sweeping data privacy measures.
In a new Medium post, Engine announced the launch of our Startup Agenda 2021, which outlines the policy priorities of the U.S. startup community. The Startup Agenda 2021 covers a range of policy issues that include capital access, connectivity, intellectual property, privacy, and more. As we explain in our post below, there are startups in every state and congressional district across the country, and their perspective is especially critical if policymakers hope to craft rules and regulations that boost innovation and competition.
The Big Story: Congress must act after Privacy Shield rollback leaves startups without certainty. A Senate panel held a hearing this week to examine ways of creating a new transatlantic data transfer pact after Europe’s top court struck down the EU-U.S. Privacy Shield earlier this year. The cross-border data pact allowed U.S. companies to process and store European users’ data in America, and the rollback of the agreement is already having adverse effects for thousands of startups and tech companies.
TLDR: While the European Union has moved in recent years to take the lead on enforcing global privacy standards, Congress has let states like California largely dictate the country’s privacy laws as a result of federal inaction on a national data privacy framework. As lawmakers prepare to discuss the importance of crafting comprehensive privacy legislation this week, it’s critical they pursue a framework that balances strong consumer privacy protections with much-needed clarity for startups and entrepreneurs.
The Big Story: Privacy Shield rollback leads to new complaints over U.S. websites. The recent court decision striking down a transatlantic data transfer deal is already having adverse effects for websites of all sizes. This week, a European privacy group founded by Austrian privacy activist Max Schrems filed complaints with European Union data regulators against 101 websites that use tools like Google Analytics and Facebook Connect.
The Big Story: EU, U.S. negotiating on “enhanced” data transfer pact. The United States and the European Union are discussing the formation of a new transatlantic data transfer pact to replace the Privacy Shield framework struck down by Europe’s top court last month. In a joint press statement released on Monday, Commerce Secretary Wilbur Ross and European Commissioner for Justice Didier Reynders said that they “have initiated discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework to comply with the July 16 judgment.”
TLDR: Europe’s top court last week struck down Privacy Shield, a data transfer pact between the European Union and the United States that allowed U.S. companies to process and store European users’ data in America. The decision, which could have an outsized impact on U.S. startups, stems from U.S. government surveillance programs that European courts have repeatedly found issues with—especially in the wake of the disclosures from former National Security Agency contractor Edward Snowden in 2013. Without the U.S. scaling back its sweeping surveillance programs, however, it’s unlikely that the EU and U.S. will be able to agree on a new framework to replace Privacy Shield—something that growing startups need to reach potential users across Europe.
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