Startup News Digest: 2/19/2016

Our weekly take on some of the biggest stories in startup and tech policy. 

Apple, Encryption, and the Future of Digital Security. This week’s federal court order that would require Apple to unlock an iPhone linked to last year’s San Bernardino attack has catapulted the debate over privacy, security, and encryption into the headlines of nearly every major news outlet in the U.S. and beyond. Evan takes a look at the ramifications of this case for startups and the tech industry, highlighting the complexity of the situation: “though the FBI’s request is tailored to investigating a specific terrorist activity, it will ultimately weaken security standards and may lead to serious vulnerabilities that will put countless consumers at risk.” Read the full post here.

MOBILE NOW Act. The battle between Democrats and Republicans over a Supreme Court nominee will not thwart Senate Commerce Committee plans to move the MOBILE NOW Act this year. The bipartisan bill, which was introduced last week by committee leaders, Sens. John Thune (R-SD) and Bill Nelson (D-FL), aims to free up additional spectrum for commercial use and improve mobile infrastructure. “I see no reason that any nomination would affect consideration of the bill,” said a staffer for Sen. Thune. While this statement should be taken with a grain of salt (things haven’t exactly been moving quickly in Congress lately, even absent the escalating clash over Justice Scalia’s replacement), it is positive news for the startup community, which supports the bill. More broadly, the Chairman’s reaction signals that lawmakers aren’t ready to give up on 2016 quite yet. We’re hopeful…

Evaluating Startup Accelerators. Startup accelerators are on the rise: today over 170 accelerators support thousands of startups throughout the country. But are they effective? The results are inconclusive, explains researcher Ian Hathaway in a report for Brookings. The top accelerators do help early-stage companies hit key milestones at an accelerated rate. And those top programs even count some unicorns among their alumni. But not all accelerators are created equal. "Much research needs to be done to better understand the effectiveness of these programs and the broader impact they have on startup communities," writes Hathway, "particularly as national and regional authorities look to them as tools for economic growth."

Unlocking the Set-Top Box. In a move aimed at promoting innovation and consumer choice, the FCC voted on Thursday to propose rules that could increase competition in the set-top box market. Did you know that pay-TV subscribers spend an average of $231 per year to rent set-top boxes from their cable provider—something that arguably could be purchased outright from a third-party for much cheaper? The problem is that there are very few meaningful alternatives on the market. The FCC’s proposal aims to change this by establishing an open platform that would allow any set-top box to work on any cable network. So a startup could develop a new set-top box that allows consumers to watch live TV, binge on Netflix, and watch reruns of their favorite shows all on that one device that they paid for once. "Let's have the cable company say, 'You want to pay me for my interface, because it does all of these things nobody else does,' rather than, 'You must pay me,' " FCC Chairman Wheeler said. "We're just trying to get to that basic American concept of competition."

Casting Doubt on Bootcamp Placement Rates. In 2015, coding bootcamps graduated over 16 thousand students with newly minted, on-demand skills. That's a 138 percent increase from the previous year and enrollment rates continue to rise. These accelerated learning programs have become an increasingly popular pathway to tech jobs, or at least so they say: many bootcamps boast job placement rates above 90 percent. However, after a closer examination of those claims, the International Business Times is skeptical of these alluring figures: "Those claims are largely un-audited by third parties and based on differing standards." As the government explores offering federal student loans to cover these new programs, this news should be taken as "more evidence that giving these schools access to federal Title IV dollars is premature and will likely lead to waste and abuse," writes an education policy analyst at New America in a follow-up post. But even that conclusion seems hasty. Instead of interpreting these inconsistencies as harbingers of abuse and exploitation, policymakers should recognize more work needs to be done in order to develop reasonable standards and promote transparency as this market matures.

NYC University Welcomes Immigrant Entrepreneurs. The City University of New York is the latest academic institution welcoming immigrant entrepreneurs to campus. In a new program called IN2NYC, 80 foreign entrepreneurs will be selected to advise professors and students at the school while working to build their own startups. And they'll do this on H1-B visas sponsored by the university. While H1-B visas are capped at 65,000, leaving companies with foreign employees to compete in an annual lottery, academic institutions are exempt from that cap. The program will begin accepting applications from entrepreneurs this spring and begin in late fall.

Principles for Europe’s Digital Ambitions. Have you visited our new Medium publication yet? We’ve been exploring Europe’s efforts to remove regulatory barriers and better integrate the U.S. and EU digital economies through its Digital Single Market (DSM) strategy. Check out perspectives on the issue from the Internet Association, Re:Create, the Application Developers Alliance, the Information Technology Industry Council, and the Computer and Communications Industry Association, and check back for posts from more stakeholders over the coming weeks!

Startup News Digest: 2/12/2016

Our weekly take on some of the biggest stories in startup and tech policy. 

India Rules on Net Neutrality. Major tech policy news from India this week, where the country's telecom regulatory authority (TRAI) effectively banned free, but limited Internet services. Such "zero-rating" programs violate net neutrality principles, TRAI announced. The decision means Facebook can no longer operate Free Basics in India, a mobile platform that offers a small set of online services, including the Facebook app, at no cost to users through an arrangement with an Indian telecom partner. Free Basics has been the subject of controversy, in India especially, for months now. Net neutrality advocates, including Indian startups, argue Facebook and other major companies shouldn’t determine which services get preferential treatment through subsidized data plans. Yet others contend these programs simply increase Internet access in a country where only 27 percent of the population is online.

Unpacking the President’s Budget Request. On Tuesday, President Obama sent his final budget request to Congress. While the proposal was declared “dead on arrival” by Republican lawmakers, it lays the groundwork for future policies and represents a roadmap for the next Administration to espouse or eschew. In a blog post this week, Emma highlights the reasonable policies and programs in the request that would support innovation and entrepreneurship—everything from creating a $4 billion Computer Science for All initiative to simplifying our tax code to make it work better for startups. Read the full post here.

Finally, a Pro-Encryption Bill. On Wednesday, Representatives Ted Lieu (D-CA) and Blake Farenthold (R-TX) introduced legislation that would prohibit states from mandating backdoors in encrypted technologies. As we’ve noted before, backdoors are not only constitutionally questionable, but also not technologically feasible without undermining the security of the system as a whole. In recent weeks, state lawmakers in both California and New York have introduced bills that would prohibit the sale of encrypted devices that cannot be unlocked. The tech community and privacy advocates welcomed Reps. Lieu and Farenthold’s bill, although some warned it may not completely squash the state proposals. According to Amie Stepanovich at Access Now, "Proposals in New York and California are aimed at preventing the sale of devices with strong encryption. Rep. Lieu's bill only mandates limits on design or alteration of devices or products." Still, the federal proposal is a step in the right direction.

Feds OK Driverless Cars sans Humans. The National Highway Traffic Safety Administration (NHTSA) has told Google that federal law will not require a licensed human driver be present in autonomous vehicles. This is good news for Google and other driverless car manufacturers building vehicles intended to operate without humans entirely, at least some of the time. Google has even expressed to regulators that the real danger is having safety features that “tempt humans to take control.” Just a few months ago, California proposed draft rules requiring steering wheels and a licensed driver in all self-driving cars. Perhaps this move by the federal government will prompt California lawmakers to reconsider their proposal.

Judicial Redress Act Passes Congress. Congress finally passed the Judicial Redress Act this week, sending it on to President Obama for his signature. The bill, which would extend rights to judicial redress to citizens of the EU and other designated countries, has been integral to the debate around an updated safe harbor agreement. The long-awaited passage of the bill will hopefully help get the new U.S.-EU Privacy Shield across the finish line.

Principles for Europe’s Digital Ambitions. Last year, the European Commission released a public consultation focused on online platforms and intermediaries (e.g. search engines, social networks, collaborative economy platforms, etc.) as a part of its broader Digital Single Market (DSM) strategy. The DSM effort aims to remove regulatory barriers across European states to better integrate the U.S. and EU digital economies. However, the consultation appears to depart from this worthy objective, contemplating proposals that would create new burdens on startups and shrink existing intermediary liability safe harbors. American business, Internet, and public interest stakeholders weighed in on the consultation, raising some of these concerns. In a new Medium publication, Principles for Europe’s Digital Ambitions, we will be featuring posts from these commenters over the coming weeks. Read Evan’s inaugural post summarizing broad concerns here, and follow the publication for updates as the DSM conversation in Europe evolves.

Startups Caught in Immigration Limbo. The "immigration limbo" is an "all-too common phenomenon among U.S. tech startups," reports Bloomberg Business this week in a profile of several immigrant entrepreneurs and the obstacles they face in building companies in the U.S. Due to visa limitations, startup founders and employees often shuffle back and forth between their home countries and the U.S. Others are forced to return home permanently, establishing their companies elsewhere. And for those immigrants who do acquire the appropriate visas, that's often after months of paperwork as well as legal fees and other expenses that can add up to over $10,000. Without meaningful immigration reform, this state of affairs is the norm. Meanwhile, countries such as Chile and Australia are attracting global talent with special visas and tax breaks, essentially trying to "capitalize on the U.S.’s foot-dragging."

Startup News Digest: 2/5/2016

Our weekly take on some of the biggest stories in startup and tech policy. 

EU and U.S. Policymakers Agree on Safe Harbor 2.0. Nearly three months after the U.S.-EU safe harbor agreement was invalidated, the European Commission announced on Tuesday that negotiators had reached a framework agreement on Safe Harbor 2.0 (rebranded as “Privacy Shield”). The agreement restores stability and some certainty to the international data flows that make the Internet work. But does this tentative framework provide the future-proof, legal certainty that is essential for startups operating in the EU? And what lessons have we learned from the drama that surrounded Safe Harbor 2.0? As Evan writes, “this difficult experience should serve as a reminder of how the heavy burden of regulatory uncertainty often falls hardest on the smallest players. Startups that made user security and privacy a central part of their companies were nevertheless caught in an international dispute between national governments and multinational companies with few feasible options to stay square with laws that quickly became unclear.” Read the whole post here.

Obama Commits $4B to CS. The White House announced its Computer Science for All initiative earlier this week, pledging an impressive $4 billion in funding for computer science education in K-12 schools across the country. “Our economy is rapidly shifting, and educators and business leaders are increasingly recognizing that CS is a ‘new basic’ skill necessary for economic opportunity and social mobility,” notes the White House press release. Today, only 28 states allow CS courses to count towards high school graduation requirements. The funding, part of the president’s forthcoming budget, focuses largely on teacher training and also calls on local leaders, educators, and the tech industry to get involved in expanding CS education.

Gig Economy Workers Take a Stand. For readers in San Francisco, here’s one more reason to stay home on Sunday: thousands of Uber drivers are planning to protest recent fare cuts by disrupting traffic around the Super Bowl. This is just the latest in a growing list of campaigns by gig economy workers to collectively push back against the platforms that facilitate their work. Debate is still raging around how apps like Uber, Postmates, and Handy should treat their workers. Since most of these workers are classified as independent contractors, they are not permitted to organize through traditional unions. But that hasn’t stopped them from banding together to leverage for what they view as appropriate treatment. In recent weeks, there have been similar protests everywhere from New York to Dallas to Tampa, with no doubt more to come.

The Geography of Venture Capital. Want to know where to build your startup, or at least get it funded? A new report reveals the current geography of venture capital. Good news for the U.S.—it remains the leader in VC investments, accounting for almost 70 percent of global venture capital. The bad news? Much of that capital is still concentrated on the coasts. In fact, 40 percent of global venture investment comes from just two broad regions—the Bay Area and the Boston-New York-Washington Corridor.

ECPA Reform Progress. The startup community got some good news on Wednesday: the House Judiciary Committee will take up the broadly supported Email Privacy Act in March. The bill, which has over 300 cosponsors and support from a range of tech companies and privacy advocates, would make much needed reforms to the outdated Electronic Communications and Privacy Act (ECPA) by explicitly requiring law enforcement to obtain a warrant before accessing digital communications. The bill has languished for years due to opposition from some civil agencies (namely the SEC and FTC) who have asked for carve-outs from the warrant requirement. It remains to be seen whether changes will be made at next month’s markup to accommodate those agencies’ requests.

Hacking Patents. On Tuesday night, Engine and the Electronic Frontier Foundation hosted a discussion with patent experts on hacking the patent system. The conversation centered around the release of an updated white paper detailing things that startups can do to navigate a broken patent system without hiring an expensive patent lawyer or even filing for a patent itself. Read the full paper here.

Startup Policy Digest: 1/29/2016

Our weekly take on some of the biggest stories in startup and tech policy. 

Safe Harbor Negotiations Continue, Judicial Redress Clears Hurdle. It has been more than three months since the U.S.-EU safe harbor agreement was invalidated. But time is running out for negotiators to reach an agreement by the January 31st deadline, and top negotiators are still clashing over both substance and turf. Some good news came on Thursday when the Judicial Redress Act passed the Senate Judiciary Committee, bringing it one step closer to becoming law. While not essential to advancing an updated safe harbor agreement, many EU negotiators see passage of the bill as a show of good faith by U.S. lawmakers. Still, it does not guarantee an agreement, and until a compromise is reached, startups with operations in the EU will be scrambling to prepare for a world without safe harbor.

Stanford Report: Binge On Violates Net Neutrality. A report from Stanford Law School’s Center for Internet and Society contends T-Mobile’s Binge On data program is in violation of the FCC’s Open Internet Order. “Binge On is harming competition, innovation, user choice, and free speech on the Internet. As such, the program is likely to violate the FCC's general conduct rule and transparency rule,” writes the study’s author in a blog post. The report has been filed with the FCC, offering the agency an opportunity to more closely evaluate the program and decide whether to take action. The FCC’s Open Internet rules don’t explicitly outlaw “zero rating” programs, but the agency reviews them on a case-by-case basis whether the service harms consumers or businesses.

Student Debt a Major Barrier to Entrepreneurship. For young, aspiring entrepreneurs, paying off student loans is one of the greatest barriers to entrepreneurship, explains a new report detailing findings from a national poll of millennials—that's 18 to 34-year-olds. Nearly half those surveyed said student loans impeded their ability to pursue their entrepreneurial ambitions, perhaps one reason why rates of business ownership among this age group have declined in the last couple of decades. The report is timely, as presidential hopefuls have begun to go on record with plans to tackle student debt crisis. This report further clarifies that reducing the now $1.3 trillion in outstanding student loans should be a priority for all policymakers. The future of American entrepreneurship depends on it.

Measuring the Gig Economy. Just how big is the gig economy? A survey last month revealed an estimated 45 million adults have offered services through an on-demand platform and now the government hopes to get a better handle on those figures. In a blog post this week, Department of Labor Secretary Thomas Perez announced the Bureau of Labor Statistics and the Census Bureau will be surveying "contingent worker" arrangements as part of May 2017's current population survey. Perez writes it'll offer the government "reliable, credible insight into what’s going on" in this new economy, ultimately helping policymakers better prepare for regulating labor agreements in a changing workforce.

FAA Registers 300K Drone Users. Last week, the the Federal Aviation Administration (FAA) announced that in just 30 days, more than 300,000 people have used the agency’s online drone registration system. It is important to note that this does not mean 300,000 drones have been registered. As TechCrunch reports, “Because you essentially register yourself as a drone pilot, which allows you to affix your registration number to as many drones as you want to, the actual number of drones/quadcopters (and model aircraft and helicopters), is likely a bit higher.” Plus, there are still probably quite a few unregistered drones flying around. These numbers are seen as encouraging by the FAA, which was hit with a lawsuit challenging the registration requirement earlier this month.

Regulatory Troubles at Theranos. The Silicon Valley blood-testing startup, Theranos, valued at over $9 billion in 2014, is facing new scrutiny, this time from federal regulators. A recent inspection of a Theranos facility by the Centers for Medicare and Medicaid Services uncovered several major violations of federal law governing clinical labs. If the issues aren’t corrected within ten days, the lab could lose its certification. A series of recent journalistic investigations have revealed the company may not be as close to revolutionizing the blood-testing industry as its initial investors and supporters once thought.