Wednesday 26 February 2020 9:25 pm

Apple receives bloody nose over Chinese censorship policies

Apple’s shareholders today launched an unsuccessful proposal critical of the firm’s removal of apps at the request of the Chinese government, despite garnering two-fifths of investors’ support.

The proposal drew a much higher proportion of votes than similar proposals in previous years which had gained support only in single-digit percentages.

The bid had called on the iPhone maker to report whether it has “publicly committed to respect freedom of expression as a human right” as part of its quarterly earnings. Shareholders ultimately defeated the bid, with 59.4 per cent of investors voting against and 40.6 per cent voting in favour.

The proposal highlighted Apple’s 2017 removal of virtual private network (VPN) apps from its App Store in China, which allow users to bypass China’s so-called Great Firewall aimed at restricting access to foreign websites.

Today was not the first time that Apple shareholders have voted down human rights measures related to China. A 2018 proposal that urged Apple to create a human rights panel to oversee issues such as workplace conditions and censorship in China, with 94.4 per cent of shareholders voting against it.

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Put forward by shareholders on behalf of consumer advocacy group Sum Of Us, today’s proposal would have required Apple to make a public commitment to free expression, report to shareholders annually on how it is upholding that commitment, and detail why it has removed apps and services on government requests.

Apple opposed this year’s proposal, saying the company already provides extensive information about when it takes down apps at the request of governments around the world and that it follows the laws in countries where it operates.

“[W]hile we may disagree with certain decisions at times, we do not believe it would be in the best interests of our users to simply abandon markets, which would leave consumers with fewer choices and fewer privacy protections,” it said.

Proxy shareholder advisory giants Glass Lewis and Institutional Shareholder Services both recommended votes in favour the measure, according to reports from them seen by Reuters.

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Five other proposals were voted upon at today’s annual general meeting by shareholders in California.

By wide margins, shareholders approved Apple’s executive pay, existing board of directors and the retention of EY as its accounting firm.

But investors defeated a “proxy access” proposal to allow shareholders to nominate more than one director to Apple’s board, with 68.9 per cent voting against and 31.1 per cent voting for. They also voted down a measure to tie executive compensation to environmental sustainability metrics, with 87.9 per cent voting against and 12.1 per cent for.

Apple had opposed both proposals.