After Christchurch, it’s time to rein in the social media giants

June 2019

For the second time in 10 years, the city of Christchurch has made headlines around the world for all the wrong reasons. Back in 2011, an earthquake and the aftershocks that continued for a year afterwards killed 185 people and caused widespread damage. The massacre in March this year, of 51 innocent Muslims during Friday prayers took only 17 minutes to unfold but this time the shockwaves are global in reach and may last for many years.

The death toll and list of the injured included people from across Asia, the Middle East and Africa. Heartbreakingly, many had arrived in New Zealand as asylum-seekers and refugees seeking safe haven. Even more shocking was the revelation that the Australian perpetrator recorded and broadcast his heinous act to the world through Facebook.

In the aftermath, horror turned to anger directed at the killer but also at Facebook. Although Facebook claimed to have removed 1.5 million shares of the video within 24 hours, it quickly became clear that the company was incapable of halting the sharing of the footage after it had been released.

U Ethical has joined a New Zealand-led global collaboration of fund managers to engage with Facebook and other social media companies. To date, the campaign includes 27 New Zealand-based fund managers and another 28 from the rest of the world. This group represents NZ$5 trillion (AU$4.7 trillion) of assets under management.

The objective of the engagement is for the social media majors (Facebook, Alphabet and Twitter) to strengthen controls to prevent the live-streaming and distribution of any objectionable content.

Has a Rubicon been crossed?

Our peers in New Zealand acknowledge the enormity of confronting some of the most profitable companies in history. However, the depth of anger at Facebook’s intransigence on acknowledging their role in the tragedy means all the funds are signing up for the long haul and are determined to force the company’s hand on the issue.

While U Ethical doesn’t hold shares in Facebook, we do invest in Alphabet (which owns Google which owns YouTube). Like Facebook and many other platforms, YouTube provides free live streaming services which can be deployed with, literally, the push of a button to broadcast almost anything.

In mid-May, the New Zealand and French prime ministers, Jacinda Ardern and Emmanuel Macron recently convened a meeting of politicians from 17 countries and leaders of eight tech companies, including Alphabet. This culminated in a joint pledge called the ‘Christchurch Call’ to eliminate terrorist and violent extremist content online.

Facebook has been under pressure internationally for the role its platforms played in tit-for-tat sectarian attacks in Sri Lanka and the US, not to mention its cavalier approach to privacy. In what many see as an attempt to stave off tighter regulation, it recently banned several prominent figures that it calls “dangerous individuals” from the platform for promoting white supremacist views. The fund managers involved in this engagement view this as a step in the right direction but believe the social media companies can do much more.

Active ownership versus divestment

Sometimes investors ask us why we don’t simply exclude companies with unacceptable practices. Our Ethical Investment Policy commits us to evaluating companies to ensure they don’t “cause or perpetuate injustice and suffering”.

On this issue, we have more leverage with Alphabet/Google by holding on to our shares and lending our name to the global engagement campaign than by divesting.