The Big Story:
NAFTA Becomes USMCA. This week, the United States, Canada, and Mexico announced the terms for an updated North American Free Trade Agreement (NAFTA), and renaming the agreement the United States-Mexico-Canada Agreement (USMCA). The terms of the deal are, on balance, a win for startups for a few key reasons.
First, USMCA’s digital chapter brings our trade agreements into the 21st century with several important provisions that will benefit innovators including a ban on data localization and the protection of cross-border data flows. Additionally, the countries have embraced the intermediary liability protections found in Section 230 of the Communications Decency Act. This is great news for small online platforms that host user generated content and users themselves.
Second, USMCA does a lot to promote e-commerce. Particularly relevant for small companies exporting goods, both Canada and Mexico agreed to double their limits on de minimis purchases and duty-free shopping, making small American exporters and startups more competitive in the region. USMCA also includes new protections for e-commerce including duty-free digital products such as e-books and software.
Third, USMCA is a bit of a mixed bag when it comes to copyright. Startups are encouraged to see the inclusion of existing copyright safe harbors found in the Digital Millennium Copyright Act. However, there are some “limitations and exceptions” the agreement leaves open to interpretation that may create a lot of trickier fair use questions that could be detrimental to going industries like machine learning, artificial intelligence, and 3D printing.
Net neutrality for California. Over the weekend, California governor Jerry Brown signed into law SB 822, a bill to reinstate net neutrality protections in the state of California. Engine and several startups voiced support for the bill. Unfortunately, the Department of Justice immediately announced it would be suing to block the law.
Airbnb and Section 230. Engine teamed up with the Harvard Cyberlaw Clinic and Stanford Professor Eric Goldman to weigh in on a case pending in front of the 9th Circuit involving Airbnb. Section 230 promotes innovation by ensuring that platforms like Airbnb can only host tremendous amounts of user generated content without being held liable for the speech of their users.
Another privacy hearing. After hearing from big companies about user privacy last week, the Senate Commerce Committee has teed up a second hearing on user privacy for next week featuring testimony from privacy advocates, the chair of the European Union’s Data Protection Board, and Alastair Mactaggart, the real estate developer behind California’s new privacy law. Give us your feedback on the conversation around privacy.
New rules for streaming services. The European Parliament passed new rules this week that govern how much “home-grown” content a platform must host and how platforms should respond when content is reported as harmful.
#StartupsEverywhere: Iowa City, IA. This week we chatted with David Hensley and Mark Nolte to learn more the partnership between the University of Iowa and the Iowa City Area Development Group. Policies and programs to further increase access to investment capital and to attract and keep c-level talent would significantly enhance entrepreneurship activity in Iowa.
The next great startup city. Across the nation, access to capital is a common concern. In 2017, seventy-six percent of venture capital money was concentrated in California, New York and Massachusetts. Looking outside of the top 10 cities, how does your city stack up?