The Securities and Exchange Commission this week rejected Apple’s request to block a Christian group from making a proposal at a shareholder meeting on what apps the technology company allows users to access.
The American Family Association said it planned to introduce a shareholder resolution at Apple’s upcoming annual shareholder meeting.
The SEC’s decision begins the new year with a significant victory for the American Family Association and the legal organization Alliance Defending Freedom over a Big Tech giant.
“The proposal requests that the board of directors conduct an investigation and issue a report evaluating the standards and procedures the company uses to curate app content on its various platforms, and procedures by which the company manages disputes between governmental interests and user rights,” the SEC ruling says.
“We are unable to concur in your view that the company may exclude the proposal under Rule 14a-8(i)(10),” the SEC review team added in a letter Tuesday to Apple’s outside attorney. “In our view, the company has not substantially implemented the proposal.”
On Oct. 23, Apple asked the Securities and Exchange Commission to exclude the American Family Association’s shareholder proposal using as justification Rule 14a-8(i)(10). That rule allows companies to exclude any shareholder proposal that they already had substantially implemented.
On Nov. 6, Michael Ross, legal counsel for corporate engagement at Alliance Defending Freedom, wrote the SEC to urge that the family group’s proposal be included at the shareholder meeting.
ADF’s letter argued that shareholders are concerned Apple is “‘limiting content access within its online services’ based on viewpoint and that it does so based on vague and subjective terms of use.”
“Major corporations like Apple shouldn’t be hiding from shareholders who are concerned about the company’s impact on free speech,” Jeremy Tedesco, ADF senior counsel and senior vice president for corporate engagement, said in a public statement. “The SEC’s decision is a much-needed step toward transparency.”
Apple did not immediately respond to inquiries from The Daily Signal for this report. Apple held its previous shareholder meeting in March.
Apple has said the company reserves the right to restrict content, and is somewhat vague about what counts as “respectful.”
“We strongly support all points of view being represented on the App Store, as long as the apps are respectful to users with differing opinions and the quality of the app experience is great,” the App Store’s guidelines for review say.
“We will reject apps for any content or behavior that we believe is over the line,” Apple says in the guidelines. “What line, you ask? Well, as a Supreme Court justice once said, ‘I’ll know it when I see it.’ And we think that you will also know it when you cross it.”
The quoted comment was made by Supreme Court Justice Potter Stewart in a 1964 case regarding obscenity. However, Apple has used that standard to block information with biblical views about marriage and sexuality from its App Store, Alliance Defending Freedom argued on behalf of the American Family Association.
Apple already scored low on ADF’s Viewpoint Diversity Score Business Index, which rates corporations on freedom of speech, Tedesco said.
“Apple needs to rebuild trust with its shareholders and customers, but that can’t happen unless it answers basic questions about whether it is treating everyone equally regardless of their political or religious views,” Tedesco said.
In the October letter to the SEC, attorney Ronald Mueller argued for Apple that the technology company was committed to “demonstrating that business can and should be a force for good and seeks to lead with its values in the technology it makes, the way it makes it, and how it treats people and the planet we all share.”
“Since its launch in 2008, the App Store has proven to be a safe and trusted place to discover and download apps,” Mueller’s letter says. “The company and its teams are committed to creating a great experience for customers and developers, and review every app for compliance with its App Store Review Guidelines to uphold the highest privacy, security, and content standards.”
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