Investors Call on World's Largest Social Network to Review the Impact of Fake News Policy Issues and Related Hate Speech on its Business and Our Democracy
BOSTON (February 2, 2017) – Concerned that long-term shareholder wealth may be at risk if Facebook and Google do not do enough to “address fake news and hoaxes,” Arjuna Capital, in partnership with Baldwin Brothers, Inc., is asking the two tech giants to evaluate the impact fabricated content is having on their platforms and businesses. Arjuna Capital is being assisted in the effort by the nonprofit organization Open MIC.
The shareholder resolution filed today at Facebook urges the company to issue a report reviewing the public policy issues associated with fake news (and related hate speech) enabled by the company. Arjuna Capital filed a similar resolution on December 29, 2016 with Alphabet Inc., the parent company of Google.
Specifically, Arjuna Capital, et.al. ask Facebook to provide detailed information regarding the impact of current fake news flows and management systems on the democratic process, free speech, and a cohesive society, as well as reputational and operational risks from potential public policy developments. The full text of the Arjuna Capital shareholder proposal now before Facebook is available online here.
In 2016, Arjuna Capital, in partnership with Baldwin Brothers Inc., made major waves in the tech world when it targeted the issue of gender pay equity. On April 27, 2016, eBay became the sixth major U.S. tech company to respond to shareholder calls for pay equity, following a 51 percent shareholder vote. As of that point in time, Arjuna Capital had achieved success in its shareholder engagements at six of nine companies it engaged: Intel (February 3rd), Apple (March 2nd), Amazon (March 23rd), Expedia (March 24th) and Microsoft (April 11th), all of which reported the gender pay gap is closed, near closed, or was to be closed shortly. Since that time, Adobe (July 25) has also reported its gender pay gap.
Natasha Lamb, managing partner at Arjuna Capital, said, “Fake news is not about spin or confirmation bias. It’s about fabrication. And when fabrication is disseminated so easily at scale, the way we have seen through social media, it represents a threat to our democracy. If Facebook maintains a platform of confusion and distortion it will lose the trust of its users, in which case they will simply move on to the next thing. At one point, we all thought that MySpace, Napster and other once-dominant online platforms would be around forever. Not the case. Few continue to get mail through AOL. That’s what concerns long-term investors. We need to know this is being handled responsibly over time.”
“Fake news isn’t a fake problem – it’s very real, and the major online platforms need to exercise real leadership in dealing with it,” said Michael Connor, Executive Director of Open MIC, a non-profit organization that works with investors on media and technology issues. Connor predicted that companies like Facebook and Google will increasingly need to “defend the integrity of the information and services they provide to their users, or else confront the risk that consumers will lose trust in them, no matter how popular those companies seem today.”
The “fake news” controversy undermines a core tenet of US democracy — an informed electorate. A December 2016 Pew Research survey found 64 percent of Americans say fabricated news stories cause a great deal of confusion about basic facts of current issues and events. This view was shared widely across incomes, education levels, and partisan affiliations.
As Facebook debates the distinctions between filtering and censorship internally, one analysis shows that false headlines generated more shares, reactions and comments than the 20 best performing mainstream news stories during the presidential campaigns.
Over the past two weeks, the fake news crisis has evolved into an international debate. On Monday, January 30, the British Parliament announced an investigation in the UK. The German government is contemplating a law to levy fines if Facebook does not promptly remove fake news posts. Handling of such content has profound implications for Facebook’s brand and reputation. If the company becomes synonymous with fake news, it poses enormous risks to investors, since it has the potential of becoming the most important cultural issue of the decade.
The full text of the Arjuna Capital/shareholder proposal submitted to Google in December 2016 is available online here.