Trump-era rules stymie investor attempts to hold Google to account on Russia

Shareholder resolutions urge better reporting on government-mandated content removal requests but regulatory resubmission thresholds have forced withdrawals.

The ongoing war in Ukraine has intensified debate on how tech companies should deal with content removal requests coming from national governments.  

At Alphabet, Google’s parent company, shareholders are attempting to increase transparency through targeted resolutions highlighting the search engine’s record of compliance with requests from Russia. However, Securities and Exchange Commission resubmission thresholds, which were established under the Trump administration, are forcing investors to withdraw proposals. 

Azzad Asset Management had planned to put its resolution targeting “government-mandated content removal requests” at Alphabet to a vote for a third year in a row but withdraw its proposal after realising it did not meet the new threshold requirements for resubmission set by the SEC. RI gained access to the withdrawal letter. 

Under the new rules, which came into force in January, if a shareholder resolution has been voted upon twice, for it to be eligible to be voted upon again it needs to have reached a threshold of at least 15 percent of votes in favour. 

Azzad’s previous resolutions in 2020 and 2021 received around 11.4 percent and 13.3 percent “for” votes, Joshua Brockwell, Azzad’s investment communications director told RI. 

Alphabet’s multi-class voting structure does not favour of investors aiming to file transparency-related proposals. The tech company’s class A common stock has one vote per each share, but class B stock has 10 votes per share. As a result, the founders of Alphabet control a majority of the company’s rights despite holding less than 13 percent of its stock. 

Azzad’s resolution called on Alphabet’s board to issue a report “assessing the feasibility of publicly disclosing on an annual basis, by jurisdiction, the list of delisted, censored, downgraded, proactively penalised, or blocklisted terms, queries or sites that the company implements in response to government requests”.

In its supporting statement, the investor said: “The Russian government has made 175 separate requests for the search engine to remove sites it has banned, totalling more than 160,000 separate URLS… About 80 percent of the total requests … resulted in removal.” 

The proposal had received support from ShareAction. “Given the context, we believe it is imperative that shareholders seek to hold the company to account in facilitating state censorship,” the investor campaign group said.

Shareholder action to address companies’ social impacts continues to lag that on climate, according to research by ShareAction. Its voting analysis of the 2021 AGM season showed that just 15 percent of social resolutions received majority support. 

Despite being prohibited from filing its proposal again, Brockwell intends to continue pushing this topic in dialogue with Alphabet.  

“We continue to believe that Alphabet would benefit from voluntary disclosure enhancements as it works with countries where human rights violations are commonplace. Proactively taking steps in furtherance of a more robust transparency report demonstrates a commitment to corporate social responsibility and by extension a stronger company,” Azzad’s withdrawal letter states. 

Alphabet is currently facing eight stakeholder proposals for its AGM on 1 June. Its preliminary agenda shows that resolution number 12 relates to a request for a report on government takedown requests.   

The resolution asks for Alphabet to publish a report on the company’s policy “in responding to requests to remove or take down material from its platforms by the executive office of the president, centres for disease control, or any agency or entity of the United States government”. 

The resolution targeting US entities in particular also aims for the report to include the name and title of the official making the content removal request. 

RI reached out to Alphabet for comment on resolution 12 but did not hear back ahead of publication.