By: Jeanette M. Shaw
General observations – Welcome to 2016. The good news is that entrepreneurship remains alive and well in America. The not so good news is that it’s “up periscope” for policymakers, regulators and lawyers looking for ways to encumber tech innovation, protect incumbents and profit from tech-unfriendly public policies. At the state and local levels (our primary though not exclusive domain of interest), we predict 2015 trends will become more pronounced as we move through 2016.
It will become even more important for tech companies in regulated or would-be regulated spaces to actively address public policy barriers as part of their overall business strategy. And investors in new technology companies will need to diligently consider public policy, regulatory and legal issues as they participate in financings and M&A transactions. Entrepreneurs and investors who ignore public policy landmines do so at their peril!
We see some key themes, most not so new. Governments and regulators will continue acting as gatekeepers seeking to preserve the status quo for incumbents or impose irrational operating rules on new entrants – sometimes for ostensibly legitimate reasons and sometimes for political reasons (we know; this is shocking). Data privacy and security issues will impact companies of every size. The notion of public safety will be used by some policymakers to regulate in ways that have little to do with public safety. Presidential candidates will continue to weigh in – sometimes insightfully, sometimes not. And lawyers and consultants will look for more opportunities to benefit from counterproductive public policies that government created. Fun stuff, yes?
Here are some of the issues we expect to see in Congress, statehouses, city halls, agency offices, courthouses and the media in 2016:
Employment classification – Whether and how new (and old) economy companies can utilize independent contractors was one of the biggest issues of 2015. In 2016, it will take on even more prominence as the W-2/1099 issue impacts more companies in more sectors than any other. Some members of Congress will continue reform conversations begun in 2015. Missing in most of the commentary will be the fact that outdated federal and state employment laws are the root cause of both the political and legal disputes surrounding independent contracting (our white paper, Modernizing Employment Policies to Unleash the New Economy, digs into why). The feds and many states and localities will engage on this issue throughout the year and it will continue to be messy.
Transportation – An interesting variety of transportation-related companies will contend with a wide range of policy issues in 2016. Ridesharing and car sharing companies will continue the fight to enter new markets (and stay in existing ones) and to keep restrictive operating regulations at bay. For ridesharing (and taxi) companies, the new battle over driver unionization, begun in Seattle at the end of 2015, will be waged in other states and localities as the year unfolds (our recent article in TechCrunch explains why Seattle’s unionization effort is bad public policy). In a category that emerged more quickly than most people imagined, states will grapple with how to regulate driverless cars in ways that allow innovation but protect public safety. And from the world of the arcane, some innovative car companies will work to overturn decades-old state restrictions on the right to sell automobiles directly to consumers.
Short-term lodging rentals – Companies in the short-term rental space will continue shaping state and local laws and regulations that define whether and how they can operate. Land-use, safety, tax collection and remittance, and information privacy are some of the issues in play here. And from the “who saw that one coming” department, companies in this category will also be drawn into “affordable housing” debates.
Drones – While drone regulation is primarily being piloted by the FAA, states and perhaps localities have privacy and public safety issues on their radar (peeping drones, oh my!). As the FAA authorizes more drone activity in 2016, we expect to see active engagement on these and other high-flying topics at the state and local level.
Fantasy sports – We’ll bet most people didn’t see fantasy sports as a hotbed of state public policy activity in early 2015. The big funding and rapid growth of daily fantasy sports companies changed all that. Using existing laws and regulations defining “gambling,” some states are seeking to shut this industry down. How federal law exempting fantasy sports from the prohibition on internet gambling applies will be a key question. That said, these are bigtime, well-funded and staffed battles, and 2016 will see further escalation.
There’s so much more. Fin Tech, Ed Tech, Health Tech, Clean Tech, [Fill-in-the-blank] Tech. And the tech we don’t yet see, coupled with the policy battles we can’t yet predict. For those of us in the tech policy arena, 2016 will be anything but boring.