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 Senate Commerce Committee held a hearing on Wednesday focused on enhancing data security. Engine Executive Director Kate Tummarello told lawmakers about startups’ need for clarity around the security measures needed to protect against data breaches and clarity around what to do if a data breach does occur. The current patchwork of state data security and data breach notification legislation—as well as the opportunity for courts across the country to determine whether companies took reasonable steps to protect against data breaches—creates confusion and uncertainty for startups, who overwhelmingly want to do the right thing and protect their users’ data. But the startup ecosystem isn’t a monolith, and every company will have a different risk profile based on the type and amount of data it has, as well as the resources it has to dedicate to data security. “Congress should create a federal framework that incentivizes strong security measures that make sense for startups and their unique risk profiles, allows room for the universe of responsible security measures to grow and adapt as the cybersecurity threat landscape evolves, and creates consistency and certainty for responsible actors, including ensuring that they won’t face unnecessary burdens in the event of a data breach,” Kate told lawmakers.
As we’ve long discussed, both startups and consumers can stand to benefit from a federal privacy law that can create protections for user data and creates consistency and certainty for startups. We hope that Congress continues to prioritize privacy and security and ensures legislation will work for the thousands of startups across the country.
Policy Roundup:
Global tax deal on the horizon. The Organization for Economic Co-operation and Development (OECD) convened today, finalizing a global tax deal. The framework which would “make international companies...shift more of their tax bills to countries where they actually conduct their business,” was joined by 136 out of 140 jurisdictions and would set a 15% minimum global tax rate. As Engine has stated in the past, any OECD deal must abandon the patchwork of digital services taxes that many countries are considering or have levied against largely American technology firms but could result in trickle down costs for startups. G-20 leaders are set to meet at the end of October for final approval of the deal. It will then face a potentially uphill battle for legislators to agree to an international accord to allow the measure to go into effect.
Qualified Small Business Stock provision could slow startup financing. The proposed $3.5 trillion reconciliation package remains in limbo as policymakers continue to debate the size and scope of the package. And although legislation contains some policies that aim to support startups and small businesses, a little-discussed provision would curtail favorable treatment of qualified small business stock, which threatens to limit financing options for new companies. As we detailed in a recent blog post, instead of crafting legislation that would stifle innovation, Congress should find new ways to encourage startup growth.
Device inaccessibility causes digital divide. A recent study found that increasing access to devices will be key to closing the digital divide. The Internet has provided entrepreneurs and startups with the opportunity to launch their innovations to reach communities they otherwise could not. We have long stated the importance of affordable, accessible, and reliable broadband. Policymakers need to prioritize not just connectivity, but ensuring people have the devices needed to take advantage of it.
Biden administration announces China trade approach. In a speech on Monday, U.S. Trade Representative Katherine Tai announced the Biden-Harris administration’s approach to trade with China, which could impact startups’ ability to compete abroad. The administration will maintain the tariffs begun under the Trump administration, and seek to engage their Chinese counterparts in new trade negotiations. As the Biden-Harris administration continues to press China to cease their malign behavior, they should strategically negotiate away from tariffs, which can dampen startup activity and job creation, chill innovation, increase costs, and make American startups less competitive abroad.
Startup Roundup:
#StartupsEverywhere: Atlanta, Georgia. Storj is an encrypted, decentralized cloud storage provider that utilizes its own digital token to facilitate transactions. We spoke with Ben Golub, the CEO of Storj, about how their platform functions, the current uncertainty around cryptocurrency and digital asset regulation, and the importance of considering startups’ perspective in policy making.
