Google Shareholder Joins Outcry Over Potential China Censorship

(Bloomberg) -- Google’s exploratory work on a censored Chinese search engine, which last year sparked employee protests and questions in the U.S. Congress, is stoking shareholder activism.

Azzad Asset Management, an investment firm that follows halal, or religiously approved Islamic guidelines, submitted a shareholder resolution to Google parent Alphabet Inc. saying the company "could enable censorship and potentially dangerous surveillance of citizens” by the Chinese government.

The proposal, which Azzad seeks a vote on at Alphabet’s shareholder meeting later this year, asks the company to publish a Human Rights Impact Assessment that would examine "the actual and potential impacts of censored Google search in China."

"Shareholders are concerned by a growing gap between Google’s stated values and actions, generating global controversy and presenting significant risk," the investment firm said in the proposed shareholder resolution.

A Google representative declined to comment, but referred to December congressional testimony in which Google Chief Executive Officer Sundar Pichai said there were no plans to launch a search product in China "right now."

Details of Google’s efforts to build a censored search engine for China, known internally as Project Dragonfly, caused concern when they were revealed by The Intercept last year. The company pulled its search engine from China years ago over government censorship, and some Google employees say a return to the country would contradict the company’s mission to make the world’s information universally accessible. Congress quizzed Pichai late last year about the initiative.

"What we’re seeing is part of a disturbing pattern” of “irresponsible corporate conduct,” said Azzad investment communications director Joshua Brockwell, citing controversies such as Google’s handling of sexual misconduct by executives that spurred a global walkout by thousands of employees in November.

Shareholder resolutions cannot pass at Alphabet without the backing of founders Larry Page and Sergey Brin, who control voting rights through a special class of shares. But Brockwell said he hopes Alphabet will voluntarily take action to address Azzad’s concerns prior to the shareholder meeting. If the issue isn’t addressed, a vote by shareholders would send an important signal even without majority support, Brockwell added.

Azzad developed the proposal with input from Google employees working with advocacy group Coworker.org. Azzad also got help from nonprofit Open MIC.

This is part of a multiyear effort “for tech companies to demonstrate accountability for their technologies to their users, to their employees, to investors, and to society at large," Open MIC Executive Director Michael Connor said.

The Dragonfly-focused proposal is one of several filed with Alphabet taking on the past year’s controversies. Another, submitted by groups led by Zevin Asset Management in collaboration with Google employees, urges the board to consider incorporating “sustainability metrics” like executive diversity into compensation.

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