AI Safety at Corporations a Concern for Biden, Shareholders

Seeking to harness the benefits of rapidly advancing artificial intelligence while also attempting to manage its growing risks, President Biden this week issued an executive order to establish new standards for AI safety, security, and privacy protection. Apparently, Biden decided to make the order following a screening at Camp David of “Mission: Impossible – Dead Reckoning Part One.” The blockbuster film follows Tom Cruise’s character, Ethan Hunt, and his ensemble of intelligence agents as they battle to save the world from a rogue AI.

Perhaps the popcorn flick caught the attention of investors, too? In recent shareholder proposals submitted to tech giants including Alphabet, Apple, and Microsoft, stockholders have expressed their concerns about AI and sought clarification on the companies’ related policies and safeguards.

Alphabet

A shareholder proposal in the proxy statement of Google’s parent company asked for more transparency around its algorithms. The proposal, by Trillium Asset Management, made multiple references to AI. Among them, it stated that “promoting fairness, accountability, and transparency in artificial intelligence is central to its utility and safety to society.”

Alphabet shareholders did not approve the proposal. In opposing the measure, the company argued that it already discloses an appropriate amount of information about Google’s algorithms. Additionally, it maintained that the proprietary algorithms are fundamental to its business.

Apple

Apple’s October request for an SEC no-action letter revealed the AFL-CIO Equity Index Funds proposed that Apple prepare a report on the use of AI in its business operations and disclose any ethical guidelines that the company has adopted regarding its use of AI technology. The proposal is part of an AFL-CIO campaign directed at entertainment companies to “fight the dehumanization of the American workforce,” according to the federation of labor unions.

Apple has asked the SEC for its blessing to exclude the proposal from proxy materials. The company is arguing that the proposal should be excluded because it “relates to the company’s ordinary business operations and the proposal seeks to micromanage the Company.”

Microsoft

Microsoft didn’t escape the attention of AI skeptics this proxy season. A shareholder proposal submitted to the software and technology company asks for an annual report on the risks created by “the company’s role in facilitating misinformation and disinformation disseminated or generated via artificial intelligence, and what steps, if any, the company plans to remediate those harms, and the effectiveness of such efforts.”

Microsoft dismissed the proposal as unnecessary, arguing that its “multi-faceted program to address the risks of misinformation and disinformation is longstanding and effective.” Shareholders will vote on the proposal at a meeting in December.

With applications such as ChatGPT still in their relative infancies, expect similar AI-related shareholder proposals to become even more prevalent soon at technology companies and in other sectors, too.