New Cyber Legislation, If Enacted, May Impact Small Businesses

Businesses, especially small businesses, continue to face difficulties with surviving and growing in a struggling economy. Despite their struggle, federal lawmakers seem focused on producing legislation that presents even further hurdles for small businesses to overcome. And although lawmakers may have good intentions with their proposed cyber legislation – specifically, to improve online security and intellectual property protections – in practice, however, the legislation may not only threaten consumer privacy but may prove expensive for small businesses to adhere to.

Cyber Legislation

Two acts, the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), are directed at stopping media piracy abroad. The bills suggest either mandating internet service providers block the addresses of foreign websites found in violation of U.S. copyright laws or using court orders to stop search engines and advertisers from promoting such sites. Opponents claim these bills are too vague and could punish innocent businesses. These acts are currently in limbo in the U.S. House and Senate, but could be floated again in the future.

Another bill called the Cybersecurity Information Sharing Act (CISPA) aims to establish “cybersecurity exchanges” which would allow government entities and companies to share information about cyber threats while working to resolve them. This law would grant immunity to any private actors who breach consumer privacy and confidentiality agreements in order to fight cyberterrorism. The Anti-Counterfeiting Trade Agreement (ACTA) is an international agreement that has been in the works since 2008. ACTA could impact U.S. citizens and businesses directly through more regulatory burdens in the effort to combat international intellectual property infringement.

Consumer Impact

Many people would agree that intellectual property should, for the most part, be protected. The issue for most opponents of cyber legislation, however, is that the cost of having more online security and intellectual property protections is the privacy and freedom that people currently enjoy online. According to one U.S. policy advisor and computer scientist, cyber legislation seems to focus on protecting the interests of the few while invading the liberty of the many. This same principle can be applied to how cyber bills bully small businesses.

According to economists, there are multiple ways that regulations, like those proposed in cyber legislation, bully small businesses. Small businesses have to spend more to become compliant, but have less to spend, so they are at a disadvantage compared to larger businesses. More laws also create inefficiencies in American small businesses, making them less competitive abroad. In addition all the regulatory efforts that are always in the works, like the many iterations of cyber laws, put small business owners in a holding pattern with regard to growing and hiring for their businesses.

Small businesses, like online startup companies, are important to job creation and innovation, especially in a lagging economy. New laws that restrict small businesses, like those the cyber legislation threatens to enact, can damage the entrepreneurial spirit and cause unexpected and devastating consequences to employment and the economy. If you are a small business owner, or are working on establishing a start-up company, make sure you consult a business law attorney about current and pending laws that could impact your business before making any sudden business moves.