SEC: Meta Must Let Shareholders Vote On Metaverse Pivot

As if the company formerly known as Facebook didn’t have enough problems, Meta is now being forced to let investors vote on the validity of its new core mission: dominating the metaverse.

The Securities and Exchange Commission (SEC) has ruled that Meta must give investors an opportunity to consider and vote on a shareholder proposal that questions Meta’s “social license to operate an emerging technology like the metaverse” without fully understanding the potential risks and negative impacts.

The SEC decision means that the proposal will be voted on at the company’s annual meeting, traditionally held in late May.

The proposal, filed in December by social activist investment management firm Arjuna Capital, Storebrand Asset Management, SHARE and SumOfUs, asks that Meta’s board commission a report and seek an advisory shareholder vote on its metaverse project.



It calls for a third-party assessment of “potential psychological and civil and human rights harms to users that may be caused by the use and abuse” of the metaverse platform expansion, including whether such potential harms “can be mitigated or avoided, or are unavoidable risks inherent in the technology.”

“Meta’s transformation into the metaverse is not a fait accompliand investors seriously question whether the company has the social license to operate a potentially dangerous emerging technology,” asserted Natasha Lamb, managing partner of Arjuna Capital. “The same issues Meta is reckoning with on Facebook and Instagram — discrimination, human and civil rights violations, incitement to violence, and privacy violations — will only be heightened in the metaverse. Investors need to understand the scope of these potential harms and weigh in on whether Zuckerberg is throwing good money after bad.”

The SEC ruling also clears the way for investors to “weigh in on whether Meta should be pumping $10 billion a year into an emerging technology, especially when they are so clearly failing to manage the risks on their core platforms," Lamb told TheStreet, noting that Meta’s stock suffered the largest decline in stock market history after the company reported negative earnings growth last quarter, driven by that investment.

Meta declared its opposition to a vote on the proposal in its proxy statement, in which the company said it believes it has “the right approach in place for our metaverse efforts."

“Given that we are already working with numerous researchers, experts, and advocates around the globe to better understand potential risks and mitigations, which is informing how we design the products and experiences that are just being built, our board of directors believes this proposal is unnecessary," the statement added.

Given that Meta CEO Mark Zuckerberg controls the voting shares, it’s highly unlikely that the proposal will pass, as TheStreet noted.

But the development points up the largely unknown nature of the metaverse at this stage, and it could indeed add fuel to investors’ scrutiny of Meta’s direction and financial plan, already being questioned due to Facebook’s loss of user share to TikTok and other social platforms, antitrust litigation against Meta, and the damage done to Meta’s reputation by the recent whistleblower testimony.

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