Startup News Digest 8/02/19

The Big Story: Fallout from Capital One breach. Capital One revealed that a massive data breach exposed personal information from over 106 million credit card holders and applicants. The announcement came after the FBI arrested a former Amazon Web Services employee accused of breaking through the bank’s firewall to access customer data stored on an Amazon cloud server. The FBI is already examining whether the woman accused of hacking into Capital One’s cloud server also successfully hacked into other organizations’ servers as well. 

Almost immediately after announcing the breach, Capital One was sued in a proposed class-action lawsuit filed in federal court in Washington, D.C. New York Attorney General Letitia James also announced that her office “will begin an immediate investigation” into the data theft. 

Big banks and tech firms are targeted by countless cyberattacks and would-be hackers each day, and the breach underscores just how vulnerable companies can be to outside intrusion—even from nefarious actors working for third-party vendors. That’s why startups support congressional efforts to draft a comprehensive data privacy framework that provides users with greater choice and transparency, but also promotes competition and ensures that smaller businesses are not squeezed out of the marketplace by knee-jerk responses or overly restrictive regulations. 

Policy Roundup:

Intel alliance wants encryption backdoor. The ‘Five Eyes’ intelligence alliance, led by the U.S., said in a statement that tech companies “should include mechanisms in the design of their encrypted products” that give law enforcement agencies the ability to access data when appropriate, just one week after Attorney General William Barr made a similar claim. Former government officials and privacy advocates questioned the alliance’s call, saying that any built-in backdoor would compromise consumers’ privacy and security. 

Trump announces additional tariffs. Following a briefing from trade advisers, President Trump announced on Twitter that the U.S. would impose 10 percent tariffs on $300 billion of Chinese goods, effective September 1st. These tariffs would affect a wider range of consumer goods, including electronics and technology products.

Huawei decision could come next week. Commerce Secretary Wilbur Ross said that the Trump administration could respond by next week to tech companies that have requested licenses to sell to Chinese telecoms firm Huawei. Tech firms have been seeking clarity since President Trump said last month that he would allow U.S. companies to continue selling to Huawei, despite the firm’s placement on a so-called “entity list.” It’s not yet clear what role, if any, the announcement of new tariffs will have on the issuance of special licenses.

FCC approves broadband mapping plan. The Federal Communications Commission voted in favor of a plan that would require broadband providers to offer more detailed data on where they provide coverage across the United States. The plan would allow the FCC to collect more accurate data for use in its broadband coverage maps.

Privacy framework includes private right of action. A draft Senate privacy framework being developed by Sen. Maria Cantwell (D-Wash.), ranking member on the Senate Commerce Committee, reportedly includes a private right of action against companies that do not do enough to protect consumer data. Commerce Committee Chairman Roger Wicker (R-Miss.) has already called the inclusion of a private right of action “totally a non-starter,” potentially hindering any progress on federal data privacy legislation. Engine opposes the inclusion of a private right of action in any privacy framework because it could lead to a deluge of bad-faith lawsuits against startups. 

Diverse input will create better AI tech. Rep. Alma Adams (D-N.C.) said in an op-ed that companies need to ensure that artificial intelligence technologies are created for the benefit of everyone by making certain that “diverse perspectives inform the development of algorithms and data sets to accurately reflect the communities we live in" to avoid biased results. 

Hawley targets “addictive” tech features. Legislation introduced by Sen. Josh Hawley (R-Mo.) would ban “addictive” features that prolong user engagement with social media platforms. The bill would make it illegal for platforms to use infinite scroll, autoplay videos, or incentivize users to continue visiting the site. 

Startup Roundup:

#StartupsEverywhere. Reno, Nevada. “The Biggest Little City in the World” might be broadly known as Las Vegas’ smaller companion city in the northwestern corner of Nevada, but Reno is fast becoming a hub for blockchain companies like Filament that are eager to capitalize on the state’s growing acceptance of the emerging technology.