Shareholder Engagement Update: Election Interference

If Facebook, Google, and Twitter become dumpster fires of disinformation and hate, users will abandon the platforms as quickly as they joined them.

Fake News

On November 1st, Facebook, Google, and Twitter will testify before Congress about their role in spreading Russian disinformation during the US presidential election. Whether you were happy with the results of the election or not, a new and growing threat to our democracy is cause for deep concern.

Our clients will not be surprised by these revelations, as together we have been pressing for greater transparency all year. Starting in January, we asked Facebook and Google to disclose the scope, scale, and impact of “fake news” on the democratic process. In June, our shareholder proposals were put to a vote at the companies’ annual meetings. The companies’ reactions have been regrettably minimal, guarded, and inadequate. Zuckerberg’s most recent promise to hire 250 “election integrity workers” seems laughable in the face of a 2-billion-person active platform.

The rules of political engagement have changed far quicker than anyone could have imagined. Ideology, disinformation, and hate speech can be propagated over the internet at lightning speed. 470 fake accounts and 3,000 advertisements were reportedly involved in the Russian interference controversy. While seemingly few, those ads reached 10 million people. Zuckerberg himself acknowledged the company’s shortcomings in February: “In the last year, the complexity of the issues we’ve seen has outstripped our existing processes for governing the community.”

Last week, Senate Democrats, with support from Republican counterparts, introduced the Honest Ads Act—campaign finance legislation that would transform online political advertising simply by making it more transparent. This is not a new idea. Honest Ads follows in the footsteps of rules governing political ads on broadcast TV. But up to this point, internet companies have been given a pass. That social license has worn thin following a string of controversies, including fake news, hate speech, violence, and election interference.

This issue is not isolated to the U.S. Tens of thousands of fake accounts were reported in Germany’s September elections, where it is now the law to promptly remove posts with unlawful content, or face hefty fines. In May, a U.K. parliamentary committee accused Facebook, Google, and Twitter of “prioritizing profit over safety by continuing to host unlawful content.” The U.K. is now considering regulating Facebook as a news organization, not a technology firm.

Facebook, Google, and Twitter have traditionally viewed themselves as “neutral” technology platforms and they are currently regulated as such. But they are far from neutral. Indeed, Zuckerberg’s solution to Facebook’s content ills—artificial intelligence—may be more dangerous than we think. Just this month, Facebook’s Chief Security Officer, Alex Stamos, warned of the unintended consequences of ideological bias from automated Machine Learning technologies: “Nobody of substance at the big companies thinks of algorithms as neutral.”

So far, social media companies have been playing a game of whack-a-mole with these problems: They react to issues as they arise, rather than adopt proactive governance solutions. In the case of Russia’s election interference, it is too little, too late. But what about the next election? As citizens, we care.

As investors, we also have a stake in this game. If Facebook, Google, and Twitter become dumpster fires of disinformation and hate, users will abandon the platforms as quickly as they joined them. Fake news and hate speech pose a dire threat to these businesses.

Because of this threat, we are coming back to the table. This month, our clients filed shareholder proposals at all three companies asking their boards how these abuses can be managed going forward. Like the Honest Ads Act, we hope to inspire transparency. Because in democracy and in business, sunlight is the best disinfectant.


Natasha Lamb, Director of Equity Research & Shareholder Engagement

The opinions expressed herein are those of Arjuna Capital, LLC (“Arjuna Capital”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. Arjuna Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Arjuna Capital is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Arjuna Capital including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.


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