As the development, deployment, and use of artificial intelligence (AI) continue to grow at remarkable rates, the significant potential benefits of AI are mirrored by equally significant potential risks, such as disinformation and data insecurity.
Take, for example, Alphabet. The parent company of Google and YouTube has long developed and deployed AI systems to power its ad businesses – including Google Search, YouTube Ads, and Google Network – which in 2023 accounted for more than 75% of Alphabet’s revenue.
But, in addition to the significant revenue generated by these systems, targeted advertising can create and exacerbate systemic discrimination and other human rights violations. Google’s current ad infrastructure is also driven by third-party cookies, which can enable companies to track the personal and behavioral data of users. Without sufficient guardrails in place, the use of third-party cookies can negatively impact user privacy. Such harms may expose Alphabet, and by extension its shareholders, to significant risk.
For the third consecutive year, the Shareholder Association for Research and Education (SHARE) filed a shareholder proposal calling for Alphabet to undertake a human rights impact assessment (HRIA) to identify, address, and prevent existing or potential adverse human rights impact stemming from Alphabet’s targeted advertising technologies.
An HRIA is a key component of the corporate responsibility to respect human rights and is critical to the broader system of ongoing human rights due diligence. Such responsibilities are outlined in the UN Guiding Principles on Business and Human Rights, which Alphabet has publicly committed to upholding.
The 2023 and 2024 proposals received nearly 50% support from independent shareholders – and in both years, proxy advisors Glass Lewis and Institutional Shareholder Services (ISS) recommended shareholders vote in favor of the proposal. This year, the proposal has been co-filed by 10 institutional investors across Europe and North America, indicating growing shareholder pressure for Alphabet to identify and address human rights risks associated with its targeted ads.
Despite significant shareholder support, Alphabet has not made commitments to improve its human rights due diligence processes associated with its targeted ads. This proposal also follows news that Alphabet is rolling back its commitment to responsible AI by abandoning its previous pledge not to use AI for weapons or surveillance. The implications of this decision on Alphabet’s broader human rights commitments and targeted advertising remain to be seen.
With growing regulatory scrutiny on responsible AI and human rights due diligence in Europe, it is imperative for Alphabet to ensure it has robust processes in place to reduce its exposure to regulatory risk. Investors also see that effective human rights due diligence efforts will help Alphabet enhance its compliance to regulation such as the Corporate Sustainability Due Diligence Directive, in which Alphabet’s subsidiaries are in scope.
Last year, SHARE sent an investor letter to Alphabet, signed by more than 30 institutional investors representing over $1.5 trillion in assets under management, calling for a commitment from the company to conduct the requested HRIA. Alphabet has not indicated willingness to address shareholder concerns.
Juana Lee
Associate Director, Corporate Engagement, SHARE