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Shareholders and regulators target big tech over social concerns

The EU’s Digital Services Act will impose tougher controls on content, advertising and algorithms.

Big tech is under pressure to address its social track record as shareholder proposals and upcoming EU regulation aim at increasing transparency in the sector.

Twitter, Meta and Amazon have their AGMs set for Wednesday, with Alphabet following suit next week. The agendas feature a multitude of shareholder proposals to increase scrutiny on workers’ rights, lobbying activities, the tackling of misinformation, censorship and human rights.

Stakeholder proposals at big tech gained momentum earlier in the AGM season when Apple investors recorded majority support for a resolution asking the company to report on the use of non-disclosure agreements with staff. A similar proposal also recently gathered 65 percent investor support at IBM. By contrast, Salesforce agreed to adopt California’s non-disclosure ban nationwide instead of facing a shareholder vote on the matter.

Still, some people involved in the proposals express caution. “We need to be realistic about the outcomes, especially at companies like Alphabet and Meta which have ‘dual class’ shares that give the company founders and other insiders powerful voting rights that make shareholder initiatives extremely challenging,” said Michael Connor, Director at Open MIC, a nonprofit which campaigns for corporate accountability in media and tech.

Open MIC is supporting a shareholder proposal at Meta that questions the company’s ”social licence to operate an emerging technology like the metaverse”. The resolution, which was filed by Arjuna Capital,  calls for a third-party assessment of potential psychological, civil and human rights harms to users. The filers argue the potential risks and negative impacts of the metaverse are not yet fully understood.

The filing has also received support from UK asset manager Schroders, which came out publicly last week in favour of 11 shareholder resolutions across Amazon, Meta and Alphabet.

Regulation

The push for more responsible policies and practices at big tech is also evident in upcoming EU regulation.

In April, the European Union reached a political agreement on its Digital Services Act, which will force big tech to implement controls on content, advertising and algorithms. The regulation will also ban online platforms from targeting ads to children and prohibit targeting based on particular characteristics of users.

The new rules will primarily apply to online marketplaces, social networks, content-sharing platforms, app stores, online travel and accommodation platforms.

“We think the Digital Services Act is a great step forward in trying to hold the big tech companies accountable,” says Connor from Open MIC, adding that greater oversight of content through regulation is needed.

He warns however, that the true test will be how the new standards are implemented and whether, in practice, the regulations can put “sufficient checks” on harmful online content. He also excepts the big tech platforms to work hard to remove the “teeth” of the regulations.

The chances of the US government adopting similar legislation are very low, Connor says. “Our sense is that the US Congress is unlikely to coalesce around any substantive legislation regarding privacy or content moderation.”

The Investor Alliance For Human Rights, which boasts 65 signatories representing more than $8.7 trillion (€7.6 trillion) in assets under, has expressed support for the Digital Services Act. In a statement, it said: “Investors are concerned with the weak governance and the lack of transparency and accountability affecting people’s rights to privacy and freedom of expression, including a lack of users’ control over their own information and how it is used online.”

Find out more about this topic from industry leaders at the RI Europe 2022 conference, taking place in person in London on 14-15 June.