This post is one in a series of reports on significant issues for startups in 2016. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the startup world's policy goals in 2016, such as immigration and patent reform, remain unfulfilled. Check back here for more year-end updates and continue to watch this space in 2017 as we follow policy issues affecting the startup community.
In 2016, disruptive technologies increasingly permeated every aspect of our lives: commercial drones took to the skies, self-driving cars hit the streets around the country, and artificial intelligence technologies proliferated. In an attempt to stay ahead of the curve, policymakers launched a number of constructive efforts to grapple with the significant potential impacts of emerging technologies. From conversations with stakeholders to new regulations, this year saw proactive engagement from policymakers on issues surrounding innovative technologies that are transforming the way we live, work, and play. While many emerging industries benefit from “permissionless innovation,” involvement from and dialogue with policymakers and regulators will remain essential going forward. These policy debates will continue to play out in 2017, and it is critical that the startup community continue to work with policymakers to help craft forward-thinking policies and adapt existing regimes to these new technologies.
Commercial Drones Take Off
Innovation in the drone industry reached new heights in 2016, with significant technological and regulatory advances. We saw a number of positive developments over the past year: more than 600,000 drones were registered with the Federal Aviation Administration (FAA); Engine launched a publication examining how government policies and regulation impact drone innovation; and just this month, Amazon completed its first drone delivery. But unarguably, the most significant policy development came in June when the FAA finalized its long-awaited commercial drone rules, allowing for commercial operations without a waiver, so long as the drone and its operator meet certain requirements. The regulations provided much-needed clarity for the emerging drone industry and were lauded as an important milestone. They took effect in August and during the three months that followed, over 23,000 drone pilot licenses were issued (equating to more than 300 per day).
Looking to 2017, we expect to see additional rules early in the year from the FAA that will fill regulatory gaps (such as flights over people and beyond-line-of-sight). It is also possible that Congress will return with the hopes of passing an FAA reauthorization bill by September 2017 that includes provisions related to drones. In terms of what the incoming Administration will mean for the drone industry, the President-elect has not yet made any public statements on drones. However, many are hopeful that having President Trump in the White House will mean looser regulations that allow for more flexibility.
A New Era of Autonomous Vehicles
In 2016, autonomous vehicles moved from the realm of science fiction to literally hitting the pavement: Uber launched a self-driving pilot in Pittsburgh; Tesla announced that all new vehicles would include fully-autonomous hardware; Alphabet spun off its self-driving car efforts into a standalone business unit called Waymo; and numerous automakers promised fully autonomous vehicles within the next five years. As the hype around driverless cars grew, so did the interest of policymakers. In January, the Obama Administration unveiled plans to include $4 billion for autonomous vehicle R&D in the proposed 2017 budget and promised to issue regulatory guidance for companies within six months. The National Highway Traffic Safety Administration (NHTSA) followed through on this pledge in September with the release of guidance that provided clarity for driverless car manufacturers and attempted to balance safety and innovation.
In spite of federal actions, many states moved to put in place their own rules governing the testing and operation of autonomous vehicles. In October, the California Department of Motor Vehicles proposed stringent regulations that would require that manufacturers adhere to NHTSA’s guidance, even though NHTSA intended for the guidelines to be voluntary. Automakers and technology companies raised concerns with this proposal, cautioning policymakers that it could impede their ability to continue developing and testing vehicles in the state. At the other end of the spectrum, Michigan passed the most permissive package of bills in the country in December, allowing for the testing, operation, and eventual sale of self-driving cars.
Going forward, it’s likely that states will continue to take a proactive approach to regulating self-driving cars. More than a dozen states introduced bills in 2016, many of which are still pending going into next year. The guidance from NHTSA included model state regulations, but it is unclear the extent to which states will pursue this more cohesive framework. In terms of additional federal activity, it remains to be seen whether NHTSA will transform its voluntary guidelines into compulsory regulations. Like the drone industry, the auto and tech industries are hopeful that President-elect Trump will make good on his anti-regulation, pro-business promises and pursue a more hands-off approach to the regulation of autonomous vehicles. We’ll be tracking developments at both the state and federal levels, as new rules will not only impact the largest automobile manufacturers, but also the emerging group of startups that are developing innovative ways to build various pieces of the self-driving stack.
Spotlight on Artificial Intelligence
The underlying technology driving the autonomous vehicle revolution—artificial intelligence (AI)—saw major advances in 2016. As a result, it also garnered a great deal of attention from policymakers. In May, the White House announced a series of workshops to discuss the policy implications of new AI technologies and opened up a request for information from stakeholders. Engine submitted comments in which we highlighted the innovation being driven by AI startups across the U.S. and cautioned policymakers against heavy-handed regulations that could slow the development and adoption of this transformative technology.
Following the workshops and public comment period, the Administration published a report detailing the current state of AI and its policy implications. The report also recommended that the White House publish another paper on the economic impacts of AI before year’s end. Just last week, the Administration followed up on this recommendation and released Artificial Intelligence, Automation, and the Economy, a report that examined how AI will transform the American economy over the coming decades. Interestingly, while the report warned of the millions of jobs that will be displaced by AI, the Administration ultimately concluded that we need more AI, not less, and called for the proactive involvement of policymakers to advance the technology while mitigating its potentially negative consequences.
This open, public dialogue around the future of artificial intelligence was largely welcomed by the AI community. However, it is unclear whether we can expect a similarly pro-AI approach under President Trump. Little is known about the President-elect’s views of AI, but given that much of AI’s projected job displacement is likely to hit the ‘Trump electorate’ the hardest, it’s possible that a Trump Administration will push back against the development of AI technologies. However, some have found hope in the fact that Peter Thiel, one of Trump’s advisors, is a strong backer of AI. Only time will tell, but given the tremendous potential of AI, it’s critical that policymakers continue to engage with stakeholders to develop an approach that encourages further growth of the technology.