Michael Connor – Executive Director, Open MIC
It’s no secret: the technology sector is booming. Currently, half of the world’s 10 largest companies by market capitalisation are US-based tech companies: Microsoft, Apple, Amazon, Alphabet and Facebook. And not far behind them are hundreds more tech firms, in the US and other countries, with billions of customers and billions more in revenue and profit.
These companies urge consumers around the globe to embed digital technologies in almost every aspect of everyday life. They promise to honour and protect users’ privacy. And, increasingly, they promise that their artificial intelligence (AI) and machine learning technologies will lead to huge breakthroughs across fields such as business, science, medicine, transportation, housing and government.
Yet today, this same tech sector is in many ways confronting an existential failure. While espousing values of innovation, ease and openness, the tech sector stands accused of facilitating social divergence and helping to dissolve social cohesion on a global scale. Regulators and legislators in multiple countries charge tech companies with privacy violations affecting hundreds of millions of people. And, as more and more companies deploy data-driven technology to target advertisements to potential buyers, recruit new employees and offer loans and mortgages, research shows these tools can bring about massive unintended harms and discriminatory outcomes.
At Open MIC – the Open Media and Information Companies Initiative – we believe that tech companies must develop policies and practices that provide transparent oversight. It’s essential that they account for the impact of tech products and services on people’s lives and our social contract. Failure to do that, we believe, is bad business.
Founded in 2007, Open MIC is a US-based non profit that works to foster greater corporate accountability in the media and technology sectors. Our primary tool is shareholder engagement. We work closely with investor partners – sustainable, responsible, impact (SRI) investors – who operate from the organising principle that responsible corporate behaviour is better business. We aim to deploy the collective power of investment management and advisory firms, mutual fund companies, foundations, pension funds and advocacy groups to help shape corporate media policies and practices.
Open MIC promotes values of openness, equity, privacy, diversity and transparency – values that provide long-term benefits for companies, the economy and the health of society. The goal is to foster the kind of open internet and tech ecosystem that enabled the early and unprecedented success of these companies in the first place.
“Data is the lifeblood of the digital economy and now the most valuable asset for many technology companies globally”
Open MIC is unique in its application of shareholder engagement to the tech sector. But the broader shareholder engagement process is well-established in US financial markets. SRI investors have for decades provided corporate management and boards with input on a wide range of corporate governance and public policy matters, such as climate change, political spending and lobbying, executive compensation and governance, civil rights and human rights, and more.
Shareholder proposals frequently highlight company-specific and/or systemic issues that pose significant risks to companies, the economy and society. With the explosion of new digital technologies, Open MIC’s work highlights emerging risks confronting not only tech companies but business sectors of all types, globally.
The risks of ‘social’ media
For several years, Open MIC has worked with shareholders to press leading social media platforms – Facebook, Twitter and Google – on issues that have exposed the companies to significant legal, financial and regulatory risk. When dialogue with the companies has failed, Open MIC has organised proposals to be voted on by shareholders at the companies’ annual general meetings.
Data is the lifeblood of the digital economy and now the most valuable asset for many technology companies globally. But the potential value of data – including its financial value – is impacted by consumers’ trust in companies to safely manage theirs. The social media platforms have been widely criticised, for example, for the role that online hate speech has played in violence offline, whether in Myanmar or New Zealand or Pittsburgh. At YouTube, on multiple occasions, leading global advertisers have withdrawn advertising that appeared adjacent to online hate speech.
Those risks to companies have concerned shareholders and prompted action. In 2018, Open MIC facilitated a public sign-on letter seeking support for shareholder proposals from Facebook’s largest institutional investors, attracting signatures from more than 80 civil and human rights organisations as well as investors with $62billion in assets under management. Following Facebook’s annual meeting, Open MIC’s analysis of the ‘independent’ shareholder vote – the investor vote excluding shares of CEO Mark Zuckerberg and other Facebook insiders – showed that some 51 per cent of outside investors had supported a proposal to establish a board-level risk committee and 41 per cent voted for a proposal demanding a report on how Facebook is managing content governance, including on issues of election interference, so-called ‘fake news’, hate speech and harassment online.
Two weeks later, Facebook’s board of directors responded to pressure from shareholders and quietly adopted important and substantial changes to the charter of one of the board’s key committees, renaming the committee to include the responsibility for ‘risk’ and broadening its mission to include oversight of issues that have placed the social media platform at the centre of global controversy, including privacy, data use, community safety and cybersecurity.
This year, alongside shareholders, such as the New York State Common Retirement Fund and Arjuna Capital, Open MIC continues to press Facebook, Google and Twitter on ‘content governance’ policies. Separately, Open MIC is working with multiple organisations to encourage shareholders to withhold their vote for Mark Zuckerberg as a member of Facebook’s board – to send a strong signal of shareholder discontent to the company founder, who also controls a majority of its shares.
Facial recognition and surveillance capitalism
The phrase surveillance capitalism, popularised by Harvard Business School’s Shoshana Zuboff, refers to the economic pressures that incentivise companies’ commodification of personal information in the digital age – separating society into the ‘watchers’ and the ‘watched’.
This includes the ways in which many tech companies have made central to their business models the extraction of personal information, the sale of consumer data to undisclosed third parties and government, the unregulated use of tech products and services, including as a means to surveil and track consumers throughout everyday life. We believe these practices present massive long-term risks to companies and society.
“Tech companies, which have benefited from operating in an unregulated environment, now face increasing pressure to abide by standards”
One of the best examples of this is Rekognition, a facial recognition technology which is marketed by the Amazon Web Services (AWS) unit of Amazon. Rekognition performs image and video analysis of faces, including identifying and tracking people and their emotions. Tests of the technology have raised concerns that it is biased, inaccurate and dangerous. In one test, Rekognition technology disproportionately misidentified African-American and Latino members of the US Congress as people in criminal mug shots, incorrectly matching 28 members of Congress with people who had been arrested, amounting to a five per cent error rate among legislators – and an even higher one among members of colour. In the hands of government, Rekognition threatens civil liberties and civil rights for all members of society, and especially for people who are more likely to be surveilled, profiled and targeted, including people of colour and immigrants.
We have organised two shareholder proposals that will be voted on at this year’s Amazon annual general meeting in May. One resolution asks Amazon to halt sales of Rekognition to government unless the board ‘concludes the technology does not pose actual or potential civil and human rights risk’, the other resolution requests the board commission an independent study of Rekognition regarding the extent to which the technology may ‘endanger, threaten, or violate’ privacy or civil rights. The proposals echo concerns of more than 70 civil rights and civil liberties groups, hundreds of Amazon’s own employees, and 150,000 people who signed a petition – all seeking to end sales of Rekognition to government agencies.
Human rights on a global scale
Global tech firms increasingly face the challenge of whether and how to market their products in countries with authoritarian governments that demand control of information. It can be a risky negotiation for a company, especially a company with an avowed commitment to human rights. We support shareholders in asking companies to uphold a commitment to human rights and free expression for all consumers, regardless of where they live – as these open internet values are precisely what fuel the tech sector’s success.
For example, a coalition of shareholders representing more than $3billion in assets under management this year filed a proposal at Alphabet Inc., parent of Google, asking the company to publish a human rights impact assessment for a controversial censored search product – Dragonfly – that Google has reportedly been developing for use in China. Led by Azzad Asset Management, the shareholders expressed concern that Google’s compliance with China’s repressive laws would facilitate and legitimise surveillance and censorship, posing human rights risks.
The shareholders’ call to action at Google was timely, given recent reports that the company is already censoring its search product in Russia, blacklisting websites according to government instructions. India’s government is considering new rules that could again implicate Google in censorship.
In submitting the resolution, shareholders are asking Google to demonstrate that the company’s stated ethical codes, values, and policies are truly informing all its products in the global market. Human rights experts say that a Google search product in China would serve as an additional surveillance tool for the government to use against all residents in that country, and that Uighurs and religious minorities – who already face state violence, systemic discrimination and grave human rights abuses – face the greatest danger.
How can the tech sector do better?
And what role should shareholders play in the digital future?
There can be dialogue between investors and corporate management that leads to the adoption of policies and practices that improve outcomes for companies and society. The shareholder proposal process often serves as an early warning signal to alert corporate managers and boards of emerging risks.
Those risks are greatest in the tech sector, where calls for ‘innovation’ at all costs have increasingly trumped respect for human rights. Tech companies, which have benefited from operating in an unregulated environment, now face increasing pressure to abide by standards, such as the Guiding Principles on Business and Human Rights (the United Nations ‘Protect, Respect and Remedy’ Framework) and must comply with laws like the European Union’s General Data Protection Regulation (GDPR). When introducing new products and services, companies should carry out human rights impact assessments that are transparent, accountable, and provide an avenue for remedy for those affected by corporate actions.
Tech companies are increasingly being pressed by regulators and even their own researchers to set up self-governance systems that scrutinise issues from privacy and consent to the potential for bias and discrimination built into machine-learning and AI systems. In early 2019, Google unveiled a high-profile, global, independent ethics council to guide ‘responsible development of AI’ at Google. Thousands of Google employees signed a petition calling for the removal of one of council member over her transphobic comments about trans people and her organisation’s scepticism of climate change – and a week later, Google disbanded the council, saying it ‘was going back to the drawing board.’
As artificial intelligence technologies are deployed across banking, retail, healthcare, education, travel and more, many industries will face similar challenges. Corporate boards and management need to be alert to the potential for AI to introduce into their businesses high elements of risk – risk which needs to be assessed and managed on a constant basis. Smart companies will insist on having digital and human rights expertise among board members, so they can better understand the implications of these new technologies.
Shareholders will play a critical role in this emerging process; investors can be key players in encouraging companies to assess and address the potential impacts of tech products and services before they are deployed. Responsible businesses must step up to participate in policy dialogues, advocate for values-based industry practices and help set and implement technical standards that promote long-term, sustainable and equitable economic solutions. At Open MIC, we believe shareholder engagement is essential to ensure they do.
About the Author:
Michael Connor helped launch Open MIC following a distinguished career as a media executive, entrepreneur and journalist. He has served as a consultant for more than a decade in the field of corporate responsibility and is the owner and Editor of Business Ethicsmagazine, an online publication.
Michael is a former staff reporter for The Wall Street Journaland Correspondent and Senior Producer for ABC News. His television work has received numerous honors, including two national Emmys, a Columbia-duPont Award, a Writers Guild Award and a nomination for an Academy Award. He also held executive positions at Dow Jones & Co., where he led global development of the company’s TV and multimedia operations, served as CEO of a London-based pan-European business news channel and was Executive Producer of The Wall Street Journal Report, a weekly syndicated program.