Startup News Digest 9/9/2016

Our Weekly Take on Some of the Biggest Stories in Startup and Tech Policy. To receive this weekly digest in your inbox, sign up at

AT&T Zero-Rates Its Own Video. Never a fan of net neutrality, AT&T has upped the ante on controversial zero-rating programs, announcing a new program this week that will allow subscribers to stream video from DirectTV (a company AT&T owns) without consuming data under the company’s data caps. This means that AT&T is giving preferential treatment to its own data and putting all other video providers at a clear competitive disadvantage. While other programs like T-Mobile’s BingeOn service have tried to avoid the most egregious net neutrality violations by allowing any video service to participate in the zero-rating program without payment, AT&T’s program seems to directly implicate the Federal Communications Commission’s Open Internet Order. While the FCC’s rules do not broadly prohibit zero-rating programs, instead opting for case-by-case adjudication, by giving preferential treatment to its own services, AT&T’s plan seems likely to invite FCC scrutiny.

Grading Crowdfunding So Far. Three months in and equity crowdfunding is “on the verge of making the honor roll,” according to a report card published in Entrepreneur this week. Since the launch of equity crowdfunding in May, equity campaigns have had higher success rates and larger investment commitments than their rewards-based counterparts. Of the 80 campaigns launched during the first quarter of 2016, 20 exceeded their target amount for a success rate of 24.4 percent. This success rate is two to three times the success rate of most rewards-based crowdfunding sites like IndieGoGo and Kickstarter. And equity participants are investing much higher amounts than rewards-based donors: the average investment commitment in an equity crowdfunding campaign is $810, which is more than 10 times the average donation on Kickstarter. You can check out the full report card here.

House Approves Cap Access Bills. Yesterday, the U.S. House of Representatives passed a package of capital access bills that included two pieces of legislation championed by Engine: the Micro Offering Safe Harbor Act (H.R.4850) and the Private Placement Improvement Act of 2016 (H.R.4852). H.R. 4850 would provide regulatory clarity for private offerings like “friends and family” fundraising rounds, while H.R. 4852 would remove regulatory burdens and reduce uncertainty for startups raising funds from accredited investors under Regulation D. “[These bills] represent commonsense, meaningful reforms that will go a long way towards facilitating capital formation for startups,” noted Engine Executive Director Evan Engstrom in our statement on the passage of the bills. We hope to see the Senate act on them before the end of this Congress.

Michigan Senate Approves Driverless Car Law. Back in June, we wrote about a package of bills introduced in Michigan that would loosen restrictions around driverless vehicles. Well, they finally passed the Michigan Senate this week and now move to the state House for consideration. Notably included in the package: a provision that would allow for autonomous vehicles to drive on public roads without a human operator present. Other provisions address the sale of driverless vehicles, on-demand operation, and a new testing site, among other things. Still, some industry stakeholders note that the Michigan laws, while a positive step, are not enough: there needs to be a national policy around driverless cars. “State regulation of driverless cars should give way to a uniform national policy, which would allow the controlled markets like those in California and Michigan to expand across the nation,” writes Consumer Technology Association president and CEO Gary Shapiro in a Wall Street Journal op-ed this week. The federal government has been working on rules for months now and said earlier this summer that guidelines were imminent, but it is unclear when they are coming or how they will interact with existing state and local laws.

Arbitration Ruling a Big Win for Uber. Remember last month when a San Francisco judge rejected Uber’s $100 million class-action settlement with its drivers? (In case you don’t, you can read about it here.) Well, things got a little bit more complicated this week. In a separate lawsuit over Uber’s background check practices, a federal appeals court ruled that Uber’s arbitration agreements with drivers are valid. This means that most of the company’s drivers must resolve their legal disputes through private arbitration instead of class action suits. Which brings us back to last month’s rejection of Uber’s settlement. The rejection sent attorneys on both sides back to the negotiating table, and this week’s ruling gives Uber the upper hand in those negotiations. With almost 379,000 of the 385,000 drivers in the case covered by the arbitration clause, the class size in the case is substantially reduced. Armed with this, Uber may be able to achieve a more favorable settlement, or simply walk away from negotiations altogether knowing that a huge portion of participating drivers would be left to privately arbitrate their complaints.

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