Startup News Digest 10/30/2015

Our weekly take on some of the biggest stories in startup and tech policy.

SEC Finalizes Crowdfunding Rules. At today’s SEC open meeting, the Commission voted to adopt Title III crowdfunding rules, finalizing the last and most highly-anticipated provision of the 2012 JOBS Act. Once the rules go into effect, (180 days after they’re enter in the Federal Register,) any investor can buy equity shares from companies raising capital online, marking a new era of financing for startups and investors alike. As Engine and industry experts have commented, the rules aren’t perfect, but their long-delayed release is the first critical phase in working with policymakers to improving and expanding the crowdfunding ecosystem.

Cybersecurity Bill Passes Senate. On Tuesday, lawmakers voted 74-21 to pass the Cybersecurity Information Sharing Act (CISA). The bill has been largely opposed by the tech community over concerns that the bill’s core information-sharing mechanism would compromise user privacy. Amendments aimed at providing additional privacy protections  didn't garner sufficient support, leaving industry stakeholders and civil liberties advocates frustrated. But the debate will not end here—there is a chance these issues will come up again as the Senate’s bill goes to conference with the House.  We’re tracking.

EU Passes (Bad) Net Neutrality Rules: The tech world's focus shifted to the EU this week, as the European Parliament voted on net neutrality rules that have caused consternation amongst open Internet advocates worldwide. Though the new European-wide rules look similar to rules the FCC passed earlier this year, the EU's regime contains many vague definitions that will allow ISPs to create and exploit loopholes that could render the EU's nominal ban on so-called "fast lanes" ineffective. For example, the rules create an exception allowing ISPs to prioritize "specialized services," but define that exception so broadly that ISPs could effectively create the types of fast lanes that the rules nominally ban. Similarly, while the U.S. rules allow the FCC to evaluate the legitimacy of zero-rating plans on a case-by-case basis, the new EU protocols allow zero-rating. While there may still be opportunities to correct these loopholes going forward, the future of an open Internet in Europe looks uncertain.

EU and US Close on New Safe Harbor: After the European Court of Justice’s rejection of the “safe harbor” that allowed U.S. companies to easily import EU customer data to the U.S., the tech world was left in a state of confusion as to what exactly was supposed to happen next. While the EU and U.S. had been hammering out a new safe harbor framework even before the old one was rejected, news this week that negotiators agreed in principle upon a new frameworks came as a pleasant surprise. Whether the new framework satisfies the ECJ’s concerns and what companies should do in the meantime remain open questions.

New Copyright Exemptions. In what has become a triennial reminder that it's impossible for the law to properly keep up to date with changing technology, the Librarian of Congress this week granted a number of exemptions to a rule in the DMCA that outlaws "circumventing" certain digital locks. This year's exemptions include rules allowing the public to tinker with car software and to jailbreak devices in order to run third party software. Of course, the exemption for security research on cars came way too late to prevent the VW emissions scandal, and the jailbreaking rule was perhaps most notable for fixing an absurd distinction between jailbreaking phones (already legal) and tablets (now legal). It's great that there is a mechanism for updating the law to reflect technological realities, but a system in which you have to wait three years before finding out whether it's legal to install third party software on your tablet needs an overhaul rather than a triennial tweak.

Can Tech Help Copyright? In an op-ed this week, Mike Masnick explores the potential for technology to solve the entertainment industry’s copyright woes. Take Sweden, for instance, where not long ago, piracy was rampant. But with the rise of forward-looking services like Spotify, which calls Sweden home, piracy rates have steadily declined. Policy lessons from other countries, detailed in a recent report, demonstrate that “attempts to reduce piracy by passing strict anti-piracy laws...had little long-term impact on piracy rates.” Instead, policymakers should embrace and support innovative ways to support the creative industry through new technologies.

Amazon Faces Worker Classification Suit. Four former Amazon Prime Now delivery drivers have sued the company, arguing that they were misclassified as contract workers instead of employees with full benefits. The suit is the latest in a long list of ongoing legal battles between on-demand workers and their employers (see Uber & Lyft, Grubhub & others, Postmates & others). As the debate continues around how to best support this growing class of workers, these cases have the potential to completely reshape the 1099 economy and the companies that operate within it.

Campaigns to Talk Tech in Iowa. Engine joins the Cedar Rapids Gazette and the Technology Association of Iowa in inviting Democrat and Republican Presidential contenders to the Iowa Presidential Tech Town Hall in Cedar Rapids this December. Candidates will share their agendas for supporting the innovation economy and take questions from a panel of tech policy leaders and local entrepreneurs. Potential topics include technology innovation, STEM education, broadband access, and entrepreneurship. More information and tickets to this event at

Startups on the Hill for Patent Reform. Engine and the Consumer Electronics Association hosted a Capitol Hill fly-in Thursday where we were joined by four startups that have battled patent trolls first-hand. Together, we spoke with eleven Senate offices, including directly with Senators Heinrich (R- NM) and Peters (D-MI), about our support for the Senate’s PATENT Act. We also delivered the letter signed by nearly 200 startups in support of the Innovation Act (House bill) and PATENT Act (Senate bill). These bills would help disincentivize bad actors in the patent system and give startups tools to defend themselves against frivolous patent litigation.

Better Broadband Competition. Startups depend on internet connectivity and benefit from greater competition among providers. Over the next few weeks, we will be highlighting a number of policies that would improve competition in the broadband market and better encourage entrepreneurial activity. Read our first post outlining the series here and stay tuned for more.