Google Shareholder Proposal to Resist Censorship

buxton2k writes "Slashdot has had plenty of stories about technology companies like Google kowtowing to repressive political regimes such as China's. I'm an (extremely) small shareholder in Google, and I looked at their proxy statement today. Most of the time, shareholders' meetings don't deal with anything other than rubber-stamping the board of directors, but Google's upcoming meeting has a interesting shareholder proposal dealing with free speech and censorship to be voted on at the May 10 meeting."

Maybe I can start to trust Google again?

Good stuff, really does look like a "Do No Evil" attempt on the part of someone in there.

The second line is "Whereas, the rapid provision of full and uncensored information through the Internet has become a major industry in the United States, and one of its major exports", but since all the rest of it really does sound like they're trying to do the morally right thing, I'm willing to say that line is there to get the vote of the pure capitalists.

There's also reference to the UN's Universal Declaration of Human Rights - rather than just a US-centric view.

Whereas, freedom of speech and freedom of the press are fundamental human rights, and free use of the Internet is protected in Article 19 of the Universal Declaration of Human Rights, which guarantees freedom to "receive and impart information and ideas through any media regardless of frontiers"

The Universal Declaration of Human Rights [un.org] pretty clearly agrees with that:

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

So every once in a while Google regains a little bit of my trust.

Re:Maybe I can start to trust Google again?

This was raised by a shareholder, in particular:

The Funds' request was submitted by Patrick Doherty, The City of New York Office of the Comptroller, 1 Centre Street, New York, New York, 1007-2341

Didn't the directors suggest a no vote?

Required Vote

Approval of the stockholder proposal requires the affirmative "FOR" vote of a majority of the votes cast on the proposal. Unless marked to the contrary, proxies received will be voted "AGAINST" the stockholder proposal.

Recommendation

Our board of directors recommends a vote AGAINST the stockholder proposal.

Re:Maybe I can start to trust Google again?

I think I'll go home and cry for a bit. I mean, I try to be positive. I don't want to be a bitter old man. But really, the board wants to be more evil? Could it at least be a big shareholder who's voice matters that's putting this out there? Can I have a happy moment?

You might want to try some anti-depressants. ;)

Seriously, the shareholder referendum, if approved, would basically tie Google's hands in regards to dealing with an oppressive regime such as China -- it would leave them no option, even if say, agents of the U.S. federal government came to them and said something like "Don't rock the boat. We're working on a strategy here and if you make noise, you'll spoil the whole thing."

Not that I'm implying this has ever happened or anything...

Re:Maybe I can start to trust Google again?

There's no such law to that effect. But there is plenty of tort.

Without the board, not much chance.

This thing doesn't stand a chance.

I've been a shareholder in a bunch of fairly big tech companies (which is not to say that I've been a big shareholder) and in only one case have I ever seen a shareholder resolution unsupported by a company's board actually pass -- and that fairly recently [pionline.com] and was widely supported by a lot of big institutional investors (who presumably only care about their ROI, and not how the money is made). (This is excepting hostile takeover actions, I'm referring only to things in the normal course of business.)

I don't know precisely how many shares of Google stock is held by the board, but I'm going to bet that it's a lot, if not a majority outright, meaning that it's probably sunk without them from the get-go.

And, like it or not, most of the big shareholders of any publicly-held corporations are going to be pension and mutual funds, investment banks, and other companies -- not the sort of entities that are generally swayed by feel-good rhetoric; they're not interested in whether Google oppresses Chinese people, only whether said oppression is profitable (and legal, because its legality directly impacts its future profitability).

I appreciate the efforts of people pushing these resolutions, but I think that if we want to change the behavior of our corporations abroad, the change needs to be legislative, so that it wouldn't adversely impact "good" companies by making them less competitive relative to "bad" ones -- which unfortunately means it would need to be via that sausage-factory we have in Washington, which given its propensity for fucking up everything it touches, is probably a Bad Idea overall.

Well...

Unless you have the backing of major shareholders and any hedge funds holding stake in Google, I wouldn't expect this to pass. It'd set up a roadblock to expansion in China, and since China = $$$, I wouldn't expect shareholders to pass anything that interferes.

This would be the same reason that owners of GM stock don't pass a resolution requiring the company to shift all their R&D into ethanol research - it doesn't make good business sense right now.

Expansion *in* China?

I don't think Google would be giving up as much as you think... hosting *anything* in China is a self-defeating policy for a software company, and this proposal doesn't keep them from censoring material: it just keeps them from doing it secretly. Simply telling people that they've had search results blocked is a competitive advantage.

This is more like a shareholder resolution that GM make some currently optional safety equipment standard. Which, history shows, would be good business sense.

Note the Recommendation of the Board: Against

So the "Do No Evil" actually lasted about 5 seconds into Google becoming a listed company. Oh well, that was quite long.

From p32: Recommendation Our board of directors recommends a vote AGAINST the stockholder proposal.

Capitalism == Situational Ethics....

Evil will always win...

...because good is dumb.

This line made me think:

3) The company will use all legal means to resist demands for censorship. The company will only comply with such demands if required to do so through legally binding procedures.

It made me think of all the "evil" companies that see breaking the law (and the associated fines or sanctions) as just the cost of doing business. On the other hand, a "good" company that basically says, "we will do no evil... unless we're breaking the law by doing good".

Re:Evil will always win...

On the other hand, a "good" company that basically says, "we will do no evil... unless we're breaking the law by doing good".

Given that the law is often evil (like laws imposing segregation, or laws criminalizing victimless crimes) this is no useful metric whatsoever.

If it's illegal to give a "western" haircut in Iran, and women who wear a leg-revealing outfit can be whipped for it, then it's easy to see that the law itself can be evil.

Founders control all the votes anyway

Remember that the Google founders have a different class of shares that count 10X as many votes per share as common shares. They can easily block any shareholder proposal they disagree with, although it certainly may look bad if there is heavy support for this.

submitting proposals

The Office of the Comptroller of New York City has advised us that it intends to submit the proposal set forth below for consideration at our annual meeting
 
The submitter doesn't say how small of a shareholder he/she is and obviously the NYC Comptroller controls more shares but publicly traded companies have to have a mechanism for shareholders to submit proposals to the shareholders' meetings. Usually there's a minimum holding for a minimum time, like 1,000 share for 180 days prior to the meeting or somesuch. OK, so 1,000 shares of Google is a whopping pile of cash to a lot of people, but an investment club could easily have that much and could submit a proposal. Anyway, my point is that if you don't like what Big Corp X is doing, buy the required min # of shares and bring up your issue(s) at every meeting until they fix it.

Perhaps it's not just about China...

The requirement to make a complete list of censored material is the most interesting, I wonder what we'd find getting blocked in the US?

I keep having to say this...

In the long run, accepting China's censorship rules is a -good- decision and a decision for good.

In the dark ages, science was dead. It wasn't until trade with the east brought goods AND ideas west that society started shaking up a bit. People started figuring out that there were alternatives to feudalistic society.

In short, trade equals exchange of ideas. Exchange of ideas equals social change. Social change equals social revolution.

Google had two choices with China (and any other country that wants censorship): Be blocked entirely from the country in every way possible, thereby preventing exchange of ideas and hampering social change OR get a foot in the door to the country, providing access to new concepts to the Chinese and thereby slowly bringing about social change and potential revolution. YES, some things are censored, but as we all know, no censoring software is perfect, and humans won't think of everything. With Google there, EVEN censoring things, ideas of freedom will leak through and spark social change.

The decision to bow to the wishes of China's censorship in order to gain access to their populace was a good, moral decision.

It's Yahoo! you really need to worry about

Whilst Google are up for a bit of censorship, Yahoo! actively assist the Chinese in tracking down dissidents and getting them put behind bars [theregister.co.uk]

They responded by talking about 'vexing issues' when they were pushed on the matter [yahoo.com]. Vexing indeed, that somebody is stuck in a cell for demanding democracy because you wanted to "look after shareholder's interests".

They say they were just complying with a "lawful request" but at some point you have to realise that certain counties are going to ask you to abide by laws you find distasteful and take the hit on not doing business in those countries. Would Yahoo have done a deal with South Africa in the 1980s? With Germany in the 1930s? Or would they have got stuck in, claiming they might be able to 'transform opinion' by way of allowing people to share (censored) pictures and arrange (authorised) events?

And they might say now that they are sorry for what happened, but they are still in China and they must in some part be willing to comply with future "legal requests" so there's a question: if the Chinese government asked for help tomorrow, would Yahoo! assist? Or would they risk being shut down in China? I suspect for all their hand-wringing, they'd hand over the paperwork but this time do their best to keep it quiet.

There's a line that Yahoo! crossed that Google is far from crossing just yet, and I think this story is indicative of how they might hope to keep it that way.

By laying out an independent moral framework aligned with UN declarations, it's possible for a multi-national to make a call on whether they can go into a country or not, or to what extent. If China wants to control and watch every bit, every byte, we as an International community with personal stakes in democracy and liberty have a role in saying they shouldn't have access to best-in-class technology whilst they want that.

The Chinese Government should not be granted the ability to be able to run surveillance over their population really well thanks to the work of engineers in Yahoo's or Google's HQ - we should be making them want this tech enough that they are prepared to compromise and grant rights to the population currently kept from them, so the tech can't be used against a population.

That's our job. Software runs civilisation. As software developers/companies, the moral imperative is with us. We are the arms manufacturers of the future, because the weapons will be software loaded with information as the ammo. We direct this gig. We don't realise it yet, but we do.

We should be saying "you don't get Google, you don't get yahoo, you don't get any of this, until you treat your people as we would wish to be treated, as we agreed by way of UN charters all mankind should be treated". Saying that by exposing China to this tech will somehow change how government works is like saying you can fix Darfur with some really noble op-ed pieces in the New York Times.

If I held Yahoo! stock, I'd sell it. I'd tell everybody else I know to sell it if they held it too. If Yahoo! say the only barometer of morality is how well the stock is doing, everybody needs to sell up and make it clear why: at that point the needle swings from "profitable to be in China" to "OMG! WTF are we doing in China? The stock is tanking!".

FWIW, I've not used a single Y! product (including flickr or upcoming) or API since they've become the henchmen of brutal dictatorships. I'd ask others to consider doing the same too.

Get over yourselves

"Do no Evil" was never serious company policy at Google. And all the repeating in the world isn't going to retroactively make it so. It was just stroking fanservice to all the MS haters at the time. At best, it was an ideal they would have liked to aspire to, if it didn't get in the way of doing business.

And by the way, who runs the office of Evil Arbitration and Determination? Ask them if it more or less Evil to :

1. do business in China by China's rules (and thereby make money for the employees and investors, at the cost of some information being censored), or

2. do business in China by Outside rules (and fight every battle over every search result, and cost the company money, and do some undetermined good to the few people that see what they want), or

3. do business outside China by Outside rules, (and hope maybe something leaks through the Great Firewall into the fastest growing and soon to be largest market in the world. But be morally clean, if somewhat impoverished, warm in the knowledge that your uncensored information was seen by... no one).

About friging China

Companies have got to follow a country's laws in order to have business in that country, period. Let the activism to governments, let World Savior George Bush free the Chinese people. Or much better, let the Chinese free themselves.

Do no evil, but what about YOU?

There is a portion of slashdot users who believe the war in iraq is about oil. Wether this is true or not is another discussion. The question is, what do you do about it?

I think that a bumper sticker on your SUV with "Impeach Bush" is not entirely convincing.

There is a portion of slashdot users who believe that the Chinese goverment is a dictatorship who opress their peoples (and others like Tiber and less directly Taiwanese) rights. Wether this is true or not is another discussion. The question is, what do you do about it?

If you are posting this on a "Made in China" PC, your anti-chinese post is not entirely convincing.

If Google is supporting the regime by agreeing to do business under its rules then anyone who buys chinese products made under chinese rules is supporting the regime as well. In some ways far more directly, what does Google contribute to the Chinese economy and the power of the goverment compared to the huge chinese export market?

Some would claim that part of the power of the chinese goverment comes less from supressionist measures like censorship and secret police, etc etc, and more from the economic success wich ensures that enough people make enough money not to complain. As long as they are not yet coming for you, what does it matter that all the people that cry out are disappearing. If you join them, who will cry out for you? Certainly not those bastards getting fat under the regime that just executed you.

We kid ourselves when we fall for lines like 'do no evil'. These are NOTHING more then marketting lines meant to make us feel good inside as long as we do not think about them. Enviromentially friendly petrol, green electricity, do no evil. Slogans with no meaning meant to appease what little consience we have left, what litte we can afford to have.

The simple fact is that you cannot NOT buy products from regimes that are morally wrong. If the war in Iraq was for oil then every mile I drive I am the cause for that war, yet I need to drive for my work (taking a van load of tools with me in public transport is NOT allowed, I tried once on a bet).

I "need" a computer and computers are made in china. You can blaim capatalism if you like, but good luck changing that.

This proposal will NOT pass, the board is against it and stockholders hardly ever vote against the board and NEVER on things like this. It wouldn't even have passed if Google had not gone public. The google owners are capatalists and capatalists will NEVER EVER do the right thing if it stands in the way of profit. If they did they would have stopped being capatalists.

This is not a damnation in itself. Where is it written that google has a duty to change China? Does that duty not foremost lie with the chinese people themselves? If they are willing, through action or in-action to live under their current regime, then that is their choice.

Remember ultimately that we ALL live in a dictatorship, a dictatorship of the masses. The masses in the US of A have voted for a system of money over principles and freedom of speech (to a degree) over protection, the masses in the EU have voted for a more social system and a restriction of speech for an exchange of protection. The Chinese people to have voted, not in an election but by their daily action of NOT overthrowing the goverment, that they approve (or at least do not disaprove enough to actually do anything about it) of the current situation.

Because let us not forget that dictatorships no matter how powerfull and seemingly in control CAN be overthown.

Like say americans who are REALLY against the war in Iraq could overthow the goverment. Afterall they claim to be in the majority, so get those guns and start fighting. Surely the majority would win? Or are you afraid that when you storm the white house and you happen to look behind you you will happen to find that you are in fact a majority of one in a military extremele significant way?

Oh and googles "do no evil" slogan, well, that should hav

Fluff

Wow. 4 Google topics on the front page right now, and this is probably the only one that isn't fluff.

Sorry for trolling, but all the google fluff is starting to annoy me.

This approach failed with Microsoft

Some MS shareholders tried a similar resolution a little while ago, right after that China blogging scandal, but the initiative didn't get a lot of press. There was an article in the Seattle Times back then that talked about why these things always fail:

http://seattletimes.nwsource.com/html/microsoft/20 03289541_microsoftholders05.html [nwsource.com]

The board of directors and the large investors never go for stuff like this. A company does not exist to make the world a better place, to live ethically, or for any of the other reasons that we attribute to people; it exists to increase shareholder value.

Larry&Sergey can outvote all other shareholder

Google has two classes of shares: Class A common shares (which are what trade under the symbol GOOG) and Class B common shares. Class B common shares are almost identical to Class A common shares, except that Class B common shares have ten votes per share, whereas Class A shares have only one vote per share. Class B shares can be converted at will to Class A shares, but the reverse is not true.

Larry Page and Sergey Brin, between them, hold enough Class B common shares to control more than 51% of the votes that exist, even though most of the economic value of the company is in Class A shares held by investors. So as long as Larry and Sergey agree with each other, they can overrule all other shareholders. They have made public statements indicating that they intend to cooperate with each other to maintain this situation, by converting any of their shares they may sell to Class A before selling them. They can each afford to sell many millions' of dollars worth of stock that way without upsetting their shared controlling interest in the company.

So if Larry and Sergey support a proposal, it passes, and if they don't, it doesn't. When you buy a Class A common share of GOOG, you're getting a share of the profits, not a usable share in making the decisions.

Google doesn't care what its shareholders think

... because they don't have to.

When the company IPOed, they issued two classes of stock: one that you could buy (Class A), and special shares for Sergey Brin, Larry Page and Eric Schmidt [usatoday.com] that carry 10 times the voting weight of the shares available on the public market (Class B). The result is that anything that Brin (founder), Page (founder) and Schmidt (CEO) don't want passed can't be passed by a shareholder vote; ordinary shareholders simply don't have the voting muscle, even if they all voted together.

Google's rationale at the time was that this arrangement would free them from pressure to constantly be posting higher earnings each quarter. In their SEC filing, they included an unusual "Letter from the Founders [sec.gov]" that defended the approach:

The main effect of this structure is likely to leave our team, especially Sergey and me, with significant control over the company's decisions and fate, as Google shares change hands. New investors will fully share in Google's long term growth but will have less influence over its strategic decisions than they would at most public companies...

Academic studies have shown that from a purely economic point of view, dual class structures have not harmed the share price of companies. The shares of each of our classes have identical economic rights and differ only as to voting rights.

Google has prospered as a private company. As a public company, we believe a dual class voting structure will enable us to retain many of the positive aspects of being private. We understand some investors do not favor dual class structures. We have considered this point of view carefully, and we have not made our decision lightly. We are convinced that everyone associated with Google--including new investors--will benefit from this structure.

(Emphasis mine)

It's hard to read the part about "retain[ing] many of the positive aspects of being private" as anything other than "we don't want shareholders telling us how to run our company". And given how the stock is structured, shareholders can't, unless they can win over one or more of the three top execs at Google to their point of view.

Solution

Whenever Google finds itself limited by government intervention, it should call itself Google-lite. This will allow Google to continue to do business, while maintaining its credibility by acknowledging the product being used does not carry Google's full feature set, quality, and potential.

A second action is that Google could report periodically how many search items are blocked by various governments. A large part of the insult to the user is the perception that we are receiving all thats available. If results are omitted we should be told, and the reason for their omission (in general categories).

I'll be the bad guy

You can't expect a hardcore regime like communist China to change over night. They are making leaps and bounds towards capitalism (which WILL eventually lead to democracy) without the coup or collapses the USSR faced. So, I don't automatically chalk Google up to being "evil" simply because they are bending the laws of censorship. Yes, they are no doubt thinking of their bottom line, but Google is one of the last moral(?) mega-companies in the world today. I'll give them the benefit of the doubt that they are doing things right for now. They are fully aware that they need to take small steps with China, or China might shut them out altogether. Then where would the potential for democracy be?

Snowball's chance in hell of passing

These kinds of morally upstanding proposals are common by gadfly shareholders. The only thing worthy of note in this effort is the fact that it was proposed by a large fund, not some wingnut. Bravo for them.

However, morals have little place in the commerce of business. I am a corporate cynic. Thus, I am certain that no corporation is going to stand up for freedom when there is money to be made cooperating with repressive governments.

The likelihood of passage, against of votes and recommendation of the board of directors, is nil.

What's interesting

is not the shareholder proposal. Every reasonably known company has 3-10 per year. However, most board of directors provide a rationale for why they suggest voting against it. Why doesn't google's board provide a reason to vote against it? Maybe it's because insiders control the votes via their special super-powers stock. Or maybe it's because they can't rationalize it.

Would this change anything?

I'm coming very late to the discussion here, but if I were to pick China as an example, hasn't Google already tried to "use all legal means to resist demands for censorship". From what I can tell, there aren't any legal means for Google to resist censorship in China. For those of you claiming "this will force Google out of China", I think you will find you're wrong.