Facebook parent faces vote on road to metaverse

Facebook’s parent company, Meta Platforms, looks set to face a shareholder vote over its much-discussed shift to new virtual technologies.

In the company’s words: “Meta goes beyond 2D screens to immersive experiences like augmented and virtual reality to help build the next evolution of social technology.”

Facebook Founder, Chairman and CEO Mark Zuckerberg wrote in a letter announcing the company’s new name and strategy last October: “The defining quality of the metaverse will be a sense of presence – as if you were there. with another person or in another place. Feeling truly present with another person is the ultimate social tech dream. That’s why we focus on building it.

He added: “In the metaverse, you will be able to do almost anything you can imagine – get together with friends and family, work, learn, play, shop, create – as well as completely new experiences that do not correspond not really. how we think of computers or telephones today.

The SEC recently denied a request by the company that it would face no action if it ruled out a proposal on the new strategy. The proposal, submitted by Arjuna Capital, asks Meta’s board to “commission a report and seek an advisory vote from shareholders on its metaverse project.” The report should summarize the results of a third-party assessment of:

  • Potential damage to the psychological and civil rights and human rights of users that may be caused by the use and abuse of the platform
  • Whether the damages can be mitigated or avoided or whether they are unavoidable risks inherent in the technology.

Arjuna Capital continues, “After the report is released, the company is expected to seek a shareholder vote expressing a non-binding consultative approval or disapproval of the metaverse project, indicating to the board and management whether investors believe the further implementation of the metaverse platform is prudent or appropriate. .’

In its documents with the proposal, Arjuna Capital writes: ‘[S]Shareholders fear the metaverse will generate dystopian downside and investment risk… The same issues Facebook faces — discrimination, human and civil rights abuses, incitement to violence, and privacy violations — may be exacerbated in the metaverse.

He adds, “Mr. Zuckerberg said the Metaverse will require ‘new forms of governance’ but provided few details, while simultaneously overseeing poor corporate governance practices at Meta as CEO, Chairman and controlling shareholder. .”

‘ORDINARY BUSINESS OPERATIONS’
Meta argued in its request for relief without action that the proposal could be omitted under Rule 14a-8(i)(7), on the grounds that it deals with matters relating to the “ordinary business operations” of the company. involving the sale of products. And services.

“The proposal clearly addresses matters relating to the ordinary business operations of the company within the scope of management’s responsibilities, as it relates to the company’s decision-making on matters such as development, marketing, the elaboration policies, revenue generation and vision for its metaverse products,’ wrote Meta. “The proposal seeks to subject product decisions to shareholder oversight. It is the fundamental responsibility of corporate management to decide how it intends to develop, market and sell its products and services, including metaverse products.

He also argued, among other things, that the proposal did not suggest that it related to an underlying “significant social policy issue” that transcends the company’s ordinary business operations: “Alluding to ‘harms potential” does not in itself produce a social policy issue, and this is especially true where the products and services do not currently exist and the potential harms are theoretical at this time.

The SEC disagreed, writing, “In our view, the proposal transcends ordinary business affairs.”

Meta did not file its proxy statement but its 2021 annual general meeting took place on May 26. A request for comment from the company on the SEC’s decision and the developer’s criticisms was not immediately returned.

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