Startup News Digest 7/26/19

The Big Story: Barr wants to end “warrant-proof” encryption. Attorney General William Barr said in a speech that tech companies should be required to provide law enforcement officials with backdoor access to “warrant-proof” encryption on devices and apps. Barr did not propose a solution or path forward during his speech, but said that encryption was “enabling dangerous criminals to cloak their communications and activities behind an essentially impenetrable digital shield.”

Encryption has become a divisive issue over the past several years, pitting tech companies against the FBI and other law enforcement agencies. Tech companies in particular are concerned that building backdoors into their products will undermine user security by weakening built-in protections. Shortly after Barr’s remarks, Sen. Ron Wyden (D-Ore.) took to the Senate floor to express concerns that the Trump administration would “knowingly” abuse its backdoor access if encryption requirements were changed.

Despite encryption being framed as a dispute between select tech companies and law enforcement agencies, Engine noted in a report that changes to current encryption protocols would dramatically impact how Internet users and startups operate in a digital space that’s beset by constant cyber threats. 

Policy Roundup:

DOJ launches antitrust review. The Department of Justice announced that it’s launching an antitrust probe to determine whether large tech companies are acting in ways that have "reduced competition, stifled innovation, or otherwise harmed consumers." 

Facebook fined as FTC chairman calls for privacy bill. FTC Chairman Joe Simons said the agency’s recent $5 billion settlement with Facebook over privacy violations was the best deal the agency could achieve with its limited authority and called on Congress to pass comprehensive privacy legislation. The SEC also announced that it will fine Facebook $100 million as part of a settlement involving the platform’s handling of user data.

Equifax fine also leads to calls for legislative action. Federal lawmakers also renewed their calls for a federal privacy framework following credit reporting firm Equifax’s $700 million settlement with state prosecutors over its own data breach response. FTC Chairman Simons said the agency could not impose its own penalty because currently law does not allow it to fine companies for their first offense — an issue that he called on Congress to address.

White House touts support for Huawei exemption. President Donald Trump, along with White House economic adviser Larry Kudlow and Treasury Secretary Steven Mnuchin, met with top executives from Google, Intel, Qualcomm, and other tech companies to discuss Huawei and the trade war with China. Despite the Trump administration blacklisting Huawei and banning the sale of U.S. technology to the telecoms giant over national security concerns, Trump agreed to provide “timely licensing decisions” on sales to Huawei to help alleviate industry concerns.

Blockchain hearing next week. The Senate Banking Committee is planning on holding a July 30 hearing with blockchain and cryptocurrency experts to discuss regulatory frameworks for digital currencies and blockchain technology. The Senate Banking Committee and the House Financial Services Committee held hearings into Facebook’s proposed Libra cryptocurrency last week where lawmakers expressed concerns about large tech companies issuing digital currencies.

CASE Act progress concerns experts. Although the Senate Judiciary Committee approved the CASE Act last week, advocacy groups remain concerned that the bill will create an unappealable review process and lead to a flood of specious copyright litigation. The legislation attempts to support independent artists by empowering the U.S. Copyright Office (instead of courts) to review copyright infringement claims, but experts say the legislation would end up hurting the artists it’s attempting to protect.

NYC considering ban on selling geolocation data. The New York City Council introduced legislation that would make it illegal for telecoms firms and mobile-based apps to sell customer location data to third-party companies. New York City would become the first U.S. city to forbid the sale of geolocation location to outside companies if the legislation is approved.

Startup Roundup:

#StartupsEverywhere. Providence, Rhode Island. The Ocean State is home to historic mansions, beautiful beaches, and something less tangible--entrepreneurial energy. Pat Sabatino, startup founder and executive director of the Rhode Island Coalition of Entrepreneurs, shares the “hidden secret” about what makes Rhode Island such a great hub of startup activity.