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Five Trends Startups Should be Watching in the 116th Congress

Rachel Wolbers

Policy Director, Engine

In a sign of the times to come, the 116th Congress was sworn in amidst a government shutdown on January 3rd. With a blue-wave in the House for Democrats and a slim majority for Republicans in the Senate, many debates in Washington will remain gridlocked. However, there are a few tech-policy issues already getting traction as both sides are eager to rein in Silicon Valley and China and tackle privacy and trade issues. Here are five trends startups should be watching in 2019:

There is a Bipartisan Desire to Understand and Regulate Tech

The 116th Congress includes several younger, more tech-savvy lawmakers, but the majority are itching to regulate (or break up) big tech. So if you thought the congressional hearings featuring CEOs from Facebook, Twitter, and Google were cringe-worthy, expect more memeable displays of tech-illiteracy as Congress tries to understand technologies like artificial intelligence, content moderation, and crypto-currencies. And while legislating in a divided Congress is tricky, a narrowly-focused anti-tech proposal can gain momentum quickly, as we saw with sex trafficking legislation last year. Unfortunately for startups, congressional desire to grab headlines by flogging tech giants could have negative consequences for the disruptors as stringent regulatory regimes tend to lock in incumbents.

The Privacy Debate Will Take Center-Stage

Last year across the Atlantic, the European Union’s General Data Protection Regulation (GDPR) went into effect, leaving startups scrambling to figure out how to implement vague, and often contradictory, regulations. Closer to home, privacy issues dominated news stories and congressional hearings, with both Democrats and Republicans expressing an eagerness to pass laws to protect consumers’ privacy and data security in 2019. Details on a course of action remain unclear, but lawmakers agree that congressional action is necessary before California’s sweeping privacy law goes into effect in 2020. Due to likely unintended consequences in the state law—many of which will have a disproportionate impact on startups—there’s hope that Congress can pass a strong federal privacy law that avoids some of the downfalls of the California law and GDPR.

Lawmakers are Trying to Tame the Chinese Dragon

Worried that China’s tech sector is outpacing America’s, lawmakers from both parties are trying to find ways to slow down Chinese dominance. The Trump Administration’s tariffs on Chinese goods received most of the headlines in 2018, but Congress got in on the action too, passing two laws giving regulators more authority to review investment and restrict exports of “emerging technologies.” If not carefully implemented, bipartisan Chinese fear-mongering could actually harm American startup’s global competitiveness by over-regulating new entrants and discouraging foreign investors.

A “New NAFTA” Vote Must Happen

In the best of times, trade votes are notoriously brutal on Capitol Hill, so expect a showdown as President Trump seeks congressional approval for the United States-Mexico-Canada Agreement (USMCA) (otherwise known as NAFTA 2.0). With the inclusion of strong protections for cross-border data flows and digital goods, most tech startups see the deal as a win and would like to these provisions applied to future trade agreements. But tech isn’t the only industry with a lot at stake. The 116th Congress can expect a swarm of lobbyists to descend upon Capitol Hill leading up to what many consider the biggest must-pass vote of 2019.  

Hyper-Partisan Tech Issues Will Stall  

Several tech priorities will remain too hyper-partisan to see any congressional action. On immigration, expect the Administration to continue to make it harder for startups to hire highly-skilled foreign workers. On net neutrality, expect the Democrats to continue to push for a repeal of Federal Communications Commission Chairman Ajit Pai’s anti-net neutrality rules. On issues concerning the gig economy (portable benefits and worker classification), taxing e-commerce transactions, or sports-betting, expect the states to take lead and potential chaos to ensue. Without congressional action how will these logjams end? The Supreme Court.

The good news? Lawmakers from both parties always want to hear from startups and your voices matter. As big-tech companies stumble, it is even more important for Washington to hear from startups outside the beltway. If you want to weigh in on policy-issues impacting your business, please do not hesitate to reach out to the Engine team, rachel@engine.is.

Rachel Wolbers

Policy Director, Engine

Rachel Wolbers is the policy director at Engine, a nonprofit organization that advocates to policymakers on behalf of startups for policies that help grow the startup ecosystem.