Alphabet Shareholders Call For Breakup Of Google Parent

As Alphabet's annual shareholders meeting approaches in June, the international consumer group SumOfUs has submitted a shareholder resolution on behalf of the company's shareholders calling for the breakup of Google's parent company, Alphabet. 

The resolution proposes that Alphabet find alternatives to its current structure that would make the company more manageable, citing concerns of cobbling together hundreds of companies, and human rights abuses.

The agenda will include elections of directors, appointment of an independent public accounting firm, the approval and amendment of Alphabet's stock plan, and a shareholders proposal regarding strategic alternatives, among other topics.

"While we believe the board of directors of Google should evaluate whether a breakup is in the best interest of shareholders, there is no question that a breakup would be good for advertisers," wrote Lisa Lindsey, capital markets adviser at SumOfUs, in an email to Search Marketing Daily. "A year ago, Google and its affiliates had an 88% market share in search advertising, which is an effective monopoly. Google’s market share is probably even higher now. When there is only one seller of a service such as search advertising, there is no effective competition to regulate prices and Google can charge whatever it wants to advertisers."



The shareholders proposal regarding strategic alternatives requests that "the board of directors "begin an orderly process of retaining advisors to study strategic alternatives and empower a committee of independent directors to evaluate those alternatives in exercise of their fiduciary responsibilities to maximize shareholder value." -- in other words, the breakup of more than 200 businesses either created or cobbled together following acquisitions. These businesses include YouTube, Android, DoubleClick and Waze.

Anti-competitive practices, privacy violations, data leaks, and illegal location tracking from Alphabet, as well as billions of dollars in fines, are a few of the reasons cited by the group to call for a breakup of the company.

"It appears that Alphabet may be too large and complex to be managed effectively," according to the proposal. "Officials in the US & EU continue to be concerned about Alphabet's market power in view of restrictions on monopolies. We believe that shareholders could receive greater value from a voluntary strategic reduction in the size of the company than from asset sales compelled by regulators."

The proposal would like the board to consider as options the unification of Class A and Class B shares of stock, and the sale, encumbrance or disposition of all or substantially all of Alphabet’s assets. The company’s still controlled by two of its founders, Sergey Brin and Larry Page, although they do not own Class A shares -- which account for 86% of outstanding shares as of March 29, 2018, pre the document.

The group representing the shareholders also cites concerns over Alphabet’s and Google's alleged work with China on Project Dragonfly.

Jack Poulson, Founder of Tech Inquiry and former Google Research Scientists, stated: "Google's CEO, Sundar Pichai, is on record in late 2018 publicly defending censoring 'less than one percent' of content for Beijing, but his testimony to the House Judiciary Committee in December was meant to imply that the Project Dragonfly had halted. Not only has Google not corrected the record by explaining how censoring terms such as 'human rights' and 'student protest' violates both Article 19 of the UDHR and their own 'AI Principles,' the company has steadfastly avoided any clarification of credible reports."

Google also published a statement that the Board of Directors recommends stockholders vote “AGAINST” this proposal. 

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