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    Categories: Legal News

Apple and Disney Face Shareholder Scrutiny Over AI Practices

In a recent development, the U.S. Securities and Exchange Commission (SEC) has rebuffed attempts by tech giant Apple (AAPL.O) and entertainment powerhouse Disney (DIS.N) to sidestep shareholder votes on the use of artificial intelligence (AI) proposed by a labor group. In notices dated January 3, the SEC rejected the companies’ requests to exclude calls for reports on their AI utilization from their upcoming annual meetings.

Rising Concerns in the Corporate Landscape

Corporations globally have eagerly embraced AI for its promised efficiencies, but this trend has triggered concerns about potential job displacement and ethical considerations. The fear that AI might replace creative and professional workers or exploit their work unfairly has become a focal point in recent Hollywood labor disputes and lawsuits by The New York Times.

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AFL-CIO Pension Trust Initiates Action

The pension trust of the AFL-CIO, the largest labor union federation in the United States, filed the shareholder proposals. This group, which already has AI-related measures pending at four other technology companies, seeks transparency and accountability in the AI practices of Apple and Disney.

AFL-CIO’s Requests to Apple and Disney

The AFL-CIO asked Apple to provide a comprehensive report on the company’s use of AI in its business operations and disclose any ethical guidelines adopted regarding AI technology. Similarly, the group requested Disney to report on its board’s role in overseeing AI usage.

In a supporting statement for Apple, the AFL-CIO emphasized that AI systems should not be trained on copyrighted works or the performances of professional performers without transparency, consent, and fair compensation to creators and rights holders.

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SEC’s Decision and Implications

Brandon Rees, deputy director of the AFL-CIO’s office of investment, sees the SEC’s decisions as potential leverage for negotiations with Apple and Disney. He suggests that reaching agreements with the tech giants could align their AI disclosures with those of other companies like Microsoft (MSFT.O). Rees contends that Apple and Disney have yet to grapple with the ethical issues surrounding AI, unlike their industry counterparts.

Companies’ Response and SEC’s Rationale

Apple and Disney, in response to the shareholder proposals, argued that they could be excluded from ballots as they related to “ordinary business operations.” They asserted that decisions about technology choices fall within the realm of ordinary business matters. However, the SEC disagreed, stating in separate letters that the proposals transcend everyday business matters and do not seek to micromanage the companies.

Apple and Disney have not yet commented on the SEC’s decisions.

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Maria Lenin Laus: