Startup News Digest 11/8/18

After Tuesday night’s midterm elections, we’re facing a new makeup of Congress next year, with a Democratic-led House and a Senate with a more significant Republican majority. Despite the new composition, we’re sure to see a lot of familiar debates surface around policy issues that impact the U.S. startup ecosystem, including around privacy, net neutrality, immigration, access to capital, and more.

A flipped House. Democrats took control of the House during this week’s elections by a slim majority. The startup ecosystem will lose some major champions at the end of this congressional term. On top of notable retirements—like House Judiciary Chairman Bob Goodlatte (R-Va.) and and Rep. Darrell Issa (R-Ca.)—several House Republican allies lost their races Tuesday, such as net neutrality advocate Rep. Mike Coffman (Co.), Email Privacy Act author Rep. Kevin Yoder (Kans.), Digital Trade Caucus Co-Chair Rep. Erik Paulsen (Minn.), and Rep. Randy Hultgren (Ill.), who helped lead this week’s Startup Week Across America. Still in limbo is Rep. Will Hurd (R-Texas), the House’s resident tech expert, whose race is still too close to call.

At the same time, some familiar Democratic faces are set to take over key House positions next year. At the House Energy and Commerce Committee, current ranking member Rep. Frank Pallone (D-N.J.) is likely to take over as chairman next year. Pallone has been a key player in several technology and telecom issues, including being a vocal advocate for net neutrality, an issue he’s already highlighting ahead of the power switch next year. Current House Judiciary Committee ranking member Rep. Jerry Nadler (D-N.Y.) is likely to take over as chairman of that committee, where he’s worked on everything from privacy, to patent reform, to responding to Republicans’ complaints about alleged anti-conservative bias online.

Some changes, but still a red Senate. Republicans retained control of the upper chamber, but startups will see some new faces when the Senate comes back next year. Most notably, Sen. Claire McCaskill (D-Mo.) lost her seat to Missouri Attorney General Josh Hawley, a frequent critic of Google and Facebook and their privacy practices. The Senate also picks up three from the House, including a familiar face to the startup community, Rep. Marsha Blackburn (R-Tenn.), as she has been a vocal critic of net neutrality and the content industry's champion on copyright law. Rep. Blackburn was also at the center of the anti-conservative bias issue when her campaign video was taken down by Twitter earlier this year. Additionally, the Senate picks up Rep. Kevin Cramer (R-N.D.), a former broadcaster who has been critical of the President on trade, and Rep. Jacky Rosen (D-Nev.), one of a small group of lawmakers with a computer science degree.   

As for who will chair important tech-policy committees, Sen. Chuck Grassley (R-Ia.), the current Chairman of the Senate Judiciary Committee, is likely to take the gavel on the Senate Finance Committee, meaning a lot of reshuffling for top spots. Additionally, it still remains to be seen if the Senate will also lose Sen. Bill Nelson (D-Fla.), the top Democrat on the Senate Commerce Committee, who has defended net neutrality. Nelson has called for a recall after losing his Senate race to current Florida Governor Rick Scott by a slim margin. 

At the state level. The 2018 elections also saw some big changes at the state level, where two tech names are taking over governors’ mansions. Rep. Jared Polis (D-Colo.), Email Privacy Act author and e-commerce entrepreneur, was elected governor of Colorado, while former San Francisco mayor Gavin Newsom was elected governor of California.

But expect some of the same debates. One theme of a Democrat-majority will be increased oversight of the Trump administration, including in the tech space, where net neutrality and oversight of the FCC is sure to be a critical issue. We also expect the federal conversation around consumer online privacy to continue, though the key players may change with Sen. John Thune (R-S.D.) turning over the gavel at the Senate Commerce Committee to Sen. Roger Wicker (R-Miss.) and several shakeups on House Energy and Commerce. Other telecom related issues that will stay on the docket include continuing to build out rural broadband and next generation 5G wireless networks.

For startups, other issues the next Congress will be addressing include figuring out how states will move forward after this year’s landmark Supreme Court ruling on online sales tax, and implementing Opportunity Zones under the 2017 Tax Cuts and Jobs Act. Additionally, immigration will remain a political football as Republicans seek additional funding for the border wall, Democrats are likely to push for changes to hot-button political issues like DACA. One piece of the immigration puzzle that may be left behind, but is the most important for startups, increasing high-skilled immigration. Finally, the biggest vote of 2019 will be Congressional approval for the United States Mexico Canada Agreement (USMCA), the new NAFTA. Trade votes are always difficult for Congress, but USMCA includes several important provisions for startups including reduced barriers to digital trade and inclusion of U.S. intellectual property law.    

Tech in elections.

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