US SEC mandates Apple, Disney to consult shareholders when deciding how to go about with AI

In a recent development, the US Securities and Exchange Commission, or SEC has ruled against tech giant Apple (AAPL.O) and entertainment conglomerate Disney, stating that they cannot exclude shareholder votes regarding their use of artificial intelligence. The SEC’s decision, outlined in notices dated January 3, follows requests by both companies to exclude calls for reports on their AI usage from their upcoming annual meetings.

The shareholder proposals, filed by a pension trust of the AFL-CIO, the largest American labour union federation, were aimed at obtaining transparency and ethical guidelines from Apple and Disney regarding their utilization of AI. The labour group has similar AI-related measures pending at four other technology companies.

At Apple, the AFL-CIO requested a report on the company’s use of AI in its business operations and urged the disclosure of any ethical guidelines adopted by the company concerning AI technology. Similarly, the group asked Disney to report on its board’s oversight role in managing AI usage.

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

The SEC’s decision could potentially lead to agreements between the labour group and Apple and Disney, aligning them with the AI disclosures of other companies such as Microsoft, according to Brandon Rees, deputy director of the AFL-CIO’s office of investment. Rees noted that Apple and Disney have yet to address the ethical concerns surrounding AI, in contrast to their counterparts.

Apple and Disney had argued that the proposals were related to ordinary business operations, including the company’s choice of technologies. However, the SEC disagreed, stating in separate letters that the proposals transcended ordinary business matters and did not seek to micromanage the companies.

As the use of AI in corporate operations raises concerns about potential job displacement and ethical considerations, these shareholder votes could signify a growing emphasis on accountability and transparency in AI practices within major corporations.

(With input from agecies)