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Google Shareholders Reject Proposal To Break Up Company

'We believe that Alphabet has grown to a size and complexity that is unmanageable, as evidenced by numerous failures of oversight and management,' said one person on behalf of SumOfUs, which backed a proposal for Alphabet to consider strategic alternatives.

Shareholders of Google parent company Alphabet today rejected an activist proposal to consider a voluntary breakup of the technology giant rather than “waiting for antitrust regulators to set a path” and perhaps compel asset sales that would result in lesser value.

Alphabet said the proposal from SumOfUs, a consumer watchdog group focused on corporate accountability, was rejected based on a preliminary tally of shareholder votes.

SumOfUs proposed that the Alphabet board retain advisors to study strategic alternatives for the company and allow a committee of independent directors to evaluate those alternatives, including the unification of Alphabet’s class A and class B shares, a sale or other asset disposition to maximize shareholder value.

“We are increasingly concerned about the negative effects technology companies like Alphabet have on people across the world,” said Sonamtso, a campaign and communications director for Students for a Free Tibet who spoke at the meeting in Sunnyvale, Calif., on behalf of SumOfUs. “We believe that Alphabet has grown to a size and complexity that is unmanageable, as evidenced by numerous failures of oversight and management. It is to the advantage of shareholders to be proactive in determining the company's next steps, rather than waiting for antitrust regulators to set a path.”

The U.S. Department of Justice and Federal Trade Commission are said to be considering antitrust actions against Alphabet, Amazon, Apple and Facebook, and Sen. Elizabeth Warren, a Massachusetts Democrat who’s running for president, has called for the breakup of Google, Amazon and Facebook as part of her presidential campaign platform. Sen. Bernie Sanders, another Democratic presidential candidate, has said that "we should definitely take a look at" breaking up companies such as Google, Amazon and Apple.

Alphabet didn’t immediately respond to CRN’s request for comment. Its board had recommended voting against the proposal.

“…Our board of directors closely reviews our business on a wide range of matters, including strategic alternatives, to ensure the interests of the company and its stockholders are protected,” the company said in its proxy statement. “Our board of directors and management do not favor a given size of the company or focus on any strategy based on ideological grounds. Instead, we develop a strategy based on the company’s customers, partners, users and the communities we serve, and focus on strategies that maximize long-term, sustainable stockholder value.”

The proposal and 12 others brought forward by shareholders, which required majority support from Alphabet’s class A and class B stockholders, were destined to fail. Alphabet CEO Larry Page and president Sergey Brin, the cofounders of Google, control 51.3 percent of shareholder votes, and Alphabet was opposed to all of the proposals.

Those proposals included requiring Alphabet to perform a human rights impact assessment no later than Oct. 30 that examined actual and potential impacts of a censored Google search engine in China.

“We continually assess all the countries around the world where we're doing business to make sure that we can offer our services as broadly as possible,” said Kent Walker, Google’s senior vice president for global affairs and chief legal officer. “As we've said, we have no plans to offer a search engine in China and will be very open to input from all stakeholders as we progress there and other product developments around the world.”

Other rejected proposals called for Alphabet to adopt a policy stating it will not engage in any “inequitable employment practice,” including mandatory arbitration of employment-related claims, non-compete agreements with employees, agreements with other companies not to recruit one another’s employees, and “involuntary non-disclosure agreements that employees are required to sign in connection with settlement of claims that any Alphabet employee engaged in unlawful discrimination or harassment.” Shareholders also voted down proposals for Alphabet to create a “societal risk” oversight committee charged with assessing the potential societal consequences of the company’s products and services, develop reports on the company’s sexual harassment policies and global median gender pay gap, and allow for the nomination of an employee representative director at Alphabet’s 2020 shareholder meeting.

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