More than four votes out of 10 at Netflix AGM supported a shareholder proposal seeking information on the company’s use of AI. Several companies have faced investor interest in this technology during this proxy season.
The proposal, filed by AFL-CIO Equity Index Funds via Segal Marco Advisorsharvest 43.3 percent of votes cast, according to a filing with the SEC. Although not a majority, such a level of support is widely considered significant by governance experts. Segal Marco Advisors submitted similar proposals at Apple and The Walt Disney Company this year. The resolution to Apple was supported by 37.5 percent of votes cast during the company’s general meeting.
Specifically, the resolution asks Netflix to publish a report that “explains the company’s use of (AI) in its business operations and the role of the board of directors in overseeing the use of AI.” AI and outlines any ethical guidelines the company has adopted regarding its use of AI.”
The proponent writes in a supporting statement: “The use of AI by large companies raises significant social policy concerns. These concerns include potential discrimination or bias in employment decisions, mass layoffs due to automation of tasks, facility closures, misuse and disclosure of private data, and the creation of ‘deeply false’ media content that could result in (the spread of) misinformation. These concerns pose a risk to the public as well as to the company’s reputation and financial position.”
“Transparency regarding (Netflix’s) use of AI, as well as any ethical guidelines governing such use, will strengthen the company. Transparency would address growing public concerns and distrust over the indiscriminate use of AI, thereby strengthening the company’s position and reputation as a responsible, trustworthy and sustainable leader in its sector. Through a transparency report, the company could establish that it is using AI in a safe, responsible and ethical way that complements the work of its employees and values the public.
The filing argues that while Netflix does not already have ethical guidelines for its use of AI, adopting such guidelines could improve the company’s performance by avoiding labor disruptions and lawsuits. It notes that last year’s strikes by writers and artists in the entertainment industry were partly the result of concerns about AI.
“In our opinion, AI systems should not be trained on copyrighted works, or on the voices, likenesses and performances of professional artists without transparency, consent and compensation for creators and owners of rights”, writes the promoter. “AI should also not be used to create literary material, nor should it replace or supplant the creative work of professional writers.”
The board requested a “no” vote
Netflix’s board had urged shareholders to vote against the resolution. He wrote in the company newspaper proxy statement: “(T)he proposal does not define the scope of AI or the areas of our business operations that the report should cover.” The Board of Directors reviewed the proposal and concluded that adoption was unnecessary and would not be in the best interests of Netflix or our shareholders.
The board argued that the company is committed to the responsible use of AI. “We believe it is important to consider whether, how and when we use emerging technologies, including AI technologies, in our business operations,” he wrote. “As with other technological advancements, we see our current explorations and use cases of AI solutions as a potentially valuable tool for many employee and internal creator use cases to unlock creativity, innovation and efficiency and serve to help them, rather than replace their work.’
The board said Netflix has guidelines on the use of certain AI tools and that its chief technology officer and management regularly brief the board on AI, the regulatory and competitive landscape as well as associated strategies, risks and opportunities.
“The proposal is vague and essentially asks the company to disclose on our website a transparency report explaining the use of AI in business operations without defining the scope of AI or the areas of our business operations that the report should cover… The lack of definition and clarity… makes the proposal fundamentally unclear and therefore difficult to implement. In addition, a report of this scope may require the disclosure of strategic initiatives, confidential research and development activities, and other information that could harm our competitive position,” the board added.
A request for comment from the company was not immediately returned.
