The start of i-Activism

Jana Partners LLC and California State Teachers Retirement System have written to Apple, the world’s largest quoted company with a market capitalisation of some $900bn, to demand that it takes action to protect children from addiction to Smartphones. The two institutions claim to own $2bn of Apple stock. The full text of the letter is HERE and it is worth a read.

Does this represent a new style of activism? It is certainly very different to the recent aggressive move on the London Stock Exchange by TCI. It is a step up in what is called “suggestivism”.

There are five reasons the letter is interesting.

1. A long term social objective and minimal short term impact on the share price
The Apple share price has hardly moved and is today trading at $175, essentially in line with the record level in December. The motivation for the activist intervention is only partly economic and even then only long term, as the letter makes clear. The key paragraph states:

“Increasingly today the gap between “short-term” and “long-term” thinking is narrowing, on issues like public health, human capital management, environmental protection, and more, and companies pursuing business practices that make short-term sense may be undermining their own long-term viability. In the case of Apple, we believe the long-term health of its youngest customers and the health of society, our economy, and the Company itself, are inextricably linked, and thus the only difference between the changes we are advocating at Apple now and the type of change shareholders are better known for advocating is the time period over which they will enhance and protect value. As you can imagine, this is a matter of particular concern for CalSTRS’ beneficiaries, the teachers of California, who care deeply about the health and welfare of the children in their classrooms.”

Separately, it is also noteworthy that there are reports that sales of the Apple I-phone X are disappointing, see HERE

2. Collaborative in tone
In the past activists have, at times, been regarded as the hooligans in the market and it is notable that the letter is extremely collaborative and constructive in tone. It congratulates Apple on its record in innovation, seeks a meeting, and suggests useful outcomes, such as the formation of an expert committee and the use of new tools to protect children.

3. Academic research
The letter references the latest academic research, including books and papers and the introductory paragraph states the investors are:

“In partnership with experts including Dr. Michael Rich, founding director of the Center on Media and Child Health at Boston Children’s Hospital/Harvard Medical School Teaching Hospital and Associate Professor of Pediatrics at Harvard Medical School, and Professor Jean M. Twenge, psychologist at San Diego State University and author of the book iGen.”

4. A big PR push
The letter has clearly taken Apple by surprise as it has reportedly not yet responded. The letter has been published early in the process and has been accompanied by a new website called “Think differently about kids”. The press like activists, and having splashed on the story, the Wall Street Journal has had it as the lead story on its global websites all day.

5. A new investor mandate
Although it is hard to dispute the belief among large institutions that companies should be good corporate citizens, one should not be too sentimental about it. According to the Wall Street Journal, this is the first step towards Jana launching a new multi-billion “corporate citizenship” fund which will include the Rock Star Sting’s wife Trudie Styler on the advisory board.

Behind this will be a whole chain of legal obligations: an investor mandate, fiduciary duties, performance targets, reporting, governance and voting at general meetings. These will, in turn, inform a whole set of behaviours and economic incentives, both for the fund itself and how it engages investee companies.

Taken together, Jana and Californian Teachers are indeed thinking differently. They are doing so, not simply out of altruism (though that is presumably a factor), but because there is apparently investor demand for a fund to support their cause. Is this the first step in a trend among investors? Let’s see.

GDPR: Is regulation tipping against social media?

Here is a short note on some important new regulations which may strengthen the hand of individuals against wrongdoing by the media, and on social media platforms.

In May 2018, the EU’s General Data Protection Regulation comes into force, which seeks to protect the personal data which companies hold on their customers and potential customers online. Its key provisions include a new right of erasure, previously known as the “right to be forgotten”.

According to the Information Commissioner’s website, the GDPR will mean:

Individuals have a right to have personal data erased and to prevent processing in specific circumstances:

  • Where the personal data is no longer necessary in relation to the purpose for which it was originally collected/processed.
  • When the individual withdraws consent.
  • When the individual objects to the processing and there is no overriding legitimate interest for continuing the processing.
  • The personal data was unlawfully processed (ie otherwise in breach of the GDPR).
  • The personal data has to be erased in order to comply with a legal obligation.
  • The personal data is processed in relation to the offer of information society services to a child.
  • Under the DPA [the existing Data Protection Act], the right to erasure is limited to processing that causes unwarranted and substantial damage or distress. Under the GDPR, this threshold is not present. However, if the processing does cause damage or distress, this is likely to make the case for erasure stronger.

We are not lawyers and you should seek legal advice on its details.  While the practical effects are yet to be determined, we anticipate an impact from a PR perspective. 

First, if you are subject to inaccurate stories in the press or misuses of personal data which are being shared on social media, then gaining a remedy or correction without going to court may be easier than it is now.

Second, opinion does seem to be tilting towards increased regulation both of use of data and of social media organisations. This is most clearly shown by the US Congress’ response to evidence of Russian intervention in their election, particularly via Facebook.

In general, Boscobel advises taking a pre-emptive approach to avoid inaccurate reporting or trolling, such as taking a careful and considered approach to your communications. It will be just as important, post-implementation, not to say anything to journalists on the record (or even off the record, in sensitive circumstances) which you would not later wish to see in print. If there is an issue, it is usually better to take it up with the journalist or editor in the first instance.

However, plainly the world has become more complicated with the advent of social media, and the 24/7 approach at most media organisations. The GDPR shows that regulators are beginning to catching up with market developments.

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