At today’s annual meeting, Nirvana bassist and shareholder Krist Novoselic, will present his shareholder proposal asking Microsoft to mitigate and remediate generative AI risks and harms.
BOSTON–(BUSINESS WIRE)–Today, Microsoft investors will vote on proposal 13, which asks the Company to report on risks associated with the misinformation and disinformation generated and disseminated via its generative Artificial Intelligence (gAI) and plans to mitigate these risks. The proposal was submitted by lead filer Arjuna Capital on behalf of Krist Novoselic, in partnership with OpenMic, and cofiled by Eko, Azzad Asset Management, Meyer Memorial Trust, and Marguerite Casey Foundation. Novoselic, co-founder and bandmember of Nirvana, will present the proposal citing concerns that Microsoft has not fully considered the business and societal risks of gAI amid its rapid deployment of the technology.
After Microsoft announced its generative AI-powered Bing last February, many AI experts and investors expressed significant concern about this seemingly preemptive release. In the days after the product’s release, users found numerous instances of misinformation and disinformation including “hallucinations” and complete fabrications. AI experts have communicated the danger of gAI tools amplifying increasingly-believable mis- and disinformation that could have consequential impacts on elections, critical thinking skills, and – ultimately – a stable democracy and economy.
“The race for commercial AI dominance has left little room for a measured approach to risk and social harm,” said Natasha Lamb, Chief Investment Officer of Arjuna Capital. “The general tech ethos of ‘move fast and break things’ is not a business plan. And the stakes are too high to let our fortunes be dictated by an AI arms race.”
Novoselic will present his concerns at Microsoft’s annual meeting stating, “Generative AI is a game changer. There is no question. But the rush to market seemingly prioritizes short-term profits over long-term success… As a long-term shareholder, I want Microsoft to succeed over the long-run. Which means our Company must do what it can today to mitigate the generative-AI risks of tomorrow.”
Microsoft shareholders are concerned about the long-term reputational and financial risks that gAI poses to the Company. Section 230 of the Communications Decency Act has long provided a liability shield to social media platforms and web hosts for false or misleading third-party content posted to their sites. However, Microsoft may be vulnerable to future legal scrutiny of mis- and disinformation produced by its own gAI tools.
Additionally, broadly-diversified investors have a vested interest in Microsoft’s gAI risk mitigation. Without effective guardrails, mis- and disinformation risks destabilizing our democracy and economy, ultimately impacting the value of diversified portfolios at large.
“Microsoft is well aware of how frequently ChatGPT spouts blatant falsehoods, and how easily it could be deployed by malicious actors to undermine trust in elections,” said Michael Connor, Executive Director of Open MIC, a co-filer of the proposal. “It’s not enough for the company to claim it has mitigated the threats to democracy and risks to investors—Microsoft needs to show its work.”
Christina O’Connell, Senior Manager of Investments and Shareholder Engagement at Eko said, “As shareholders, we require greater transparency on Microsoft’s gamble with generative AI. From the hasty integration of ChatGPT into our company’s products to the chaotic responses to the recent OpenAI shakeup, we have not seen a thoughtful and considered approach to developing and commercializing this significant new technology.”
Microsoft’s Board responded to the proposal by stating it had already fulfilled the proposal’s request with existing and upcoming reporting. Yet, the proposal seeks information that goes beyond these reports’ generic commitments to responsible AI, specifically calling on Microsoft to comprehensively assess gAI’s risks to the Company and society and evaluate the effectiveness of its risk mitigation measures on a go-forward basis.
Meta Platforms and Alphabet investors will also have an opportunity to vote on similar proposals at their annual meetings this spring.
For more information about the proposal, you can find Arjuna Capital’s investor memorandum here.
Arjuna Capital is a sustainable investment firm that works with accredited investors and institutions to invest their assets with a lens toward environmental, social, and governance (“ESG”) risk and opportunity.