Facebook, Twitter Controversies Renew Shareholder Calls for Oversight

COVID-19 and U.S. elections are amplifying shareholder calls for better oversight of social media, even if the proposals are doomed to fail.
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At their annual shareholder meetings, a group of shareholders are renewing calls for greater oversight at social media firms. 

At Facebook's annual shareholder meeting on Wednesday, a chorus of shareholders implored the company to adopt a variety of measures aimed at improving oversight and reducing the negative effects on society. Facebook  (FB) - Get Report shares fell 1.45% on Wednesday to $228.84.

Proposals ranged from changing Facebook's voting structure; installing an independent board chairman in place of CEO Mark Zuckerberg, who currently holds both roles; eliminating political advertising on Facebook; installing a civil rights expert on the board; closing the gender pay gap; and taking more aggressive actions to reduce child exploitation. 

Each of those agenda items failed to pass a vote, having bumped up against Facebook's dual-share voting structure, which grants Zuckerberg more than 60% of voting shares. Outside shareholders cite this structure as the root of many ills at the company, and one that exposes shareholders to undue risk. 

"Facebook’s lack of an independent board empowers one person who has proven time and again disregard for basic decency in pursuit of advertising dollars," said Andrew Behar, CEO of YouSow, a Facebook shareholder. "The lack of oversight has enabled decisions allowing child pornography, hate speech, self-endangerment related to COVID-19, organizing against the U.S. government, and foreign attacks on democracy." 

Investors speaking at the meeting pointed to the risks of regulation and controversies depressing the value of shares, referencing a weeks-long slide in the stock after Facebook disclosed heavier spending on security. Those risks are exacerbated by the COVID-19 crisis and misinformation ahead of the November U.S. election, they said. 

Ahead of Twitter's  (TWTR) - Get Report shareholder meeting, also on Wednesday, shareholders echoed similar concerns that the company isn't doing enough to minimize a corrosive effect on society. 

Recent tweets by President Trump became a flashpoint for shareholder demands that Twitter improve oversight of the service. Trump took to Twitter to spread a long-debunked conspiracy theory about a prominent media critic; and just hours later, told followers that mail-in voting would lead to a "rigged election."

"We do not live in a dictatorship, and Twitter has not only the right, but the responsibility, to stop the spread of disinformation and hate across its platform," said Natasha Lamb of Arjuna Capital, which holds shares in both Facebook and Twitter. "Unfortunately social media platforms have become megaphones for hate, putting both marginalized groups and shareholder value at risk." 

In response to growing fury over Trump's misleading or false tweets, Twitter says it is "accelerating" plans to expand policy guidelines for problematic tweets. 

The company attached a label to one of Trump's tweets for the first time this week, labeling his voting-related tweets with a "get the facts" resource that directs users to reliable voting information. 

That sparked a swift backlash from Trump, who likened the labeling to "stifling FREE SPEECH" in follow-up posts, and also warned of "big action" against the firm. 

Twitter shares are up 2% year to date. 

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