The Purpose of Big Tech Companies – Shift Alt Control

Big Tech (BT) companies play an increasingly significant role in social, economic and political life. They contribute positively to digital value creation facilitating new business ventures and connections. At the same time, many of them have been accused of complicity in: subverting democratic processes; anti-competitive practices; breaching privacy rights; monetising human experiences; manipulating vulnerable users; and failing to take pre-emptive action against mis-information and on-line bullying. The storming of the Capitol buildings in Washington on 6 January 2021 exemplified both the power of BT companies and the attendant risks. There is a growing awareness of the need for more responsible behaviour by BT companies. While a holistic approach will be needed to resolve the complex issues raised, included in this mix should be a question as to the purpose of these companies and the extent to which this purpose should be prescribed and enforced in order to protect the public interest.

Purpose

What do we mean by the ‘purpose’ of a company? Scholars such as Mayer and Edmans have recently called for companies to simultaneously seek to benefit stakeholders and generate profit. This seems consistent with the widely publicised commitment by Business Roundtable CEOs in 2019 to ‘lead their companies to the benefit of all stakeholders’ and Larry Fink’s proclamation in 2020 that ‘a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders’.  Whether their actions are always consistent, many BT companies express a similar commitment. Amazon for example emphasises its reliance on its employees and its commitment ‘to extending our leadership in a way that benefits customers and therefore, inherently, investors’. By contrast, Facebook’s Corporate Governance Guidelines do not refer to stakeholders and reference its directors’ commitment to decision making ‘with a view to enhancing long-term value for Facebook stockholders’.

Mission Statement

The search for a company’s purpose is more fruitfully conducted by examining its mission statement.  Such a statement is viewed as a key strategic management tool identifying the scope of its operations and reflecting its values and priorities (Rajasekar). The Financial Reporting Council (FRC) in its UK Corporate Governance Code 2018 (the Code) highlights the importance of identifying a company’s purpose and values and ensuring that these are aligned with its culture.  Although the Code does not define the term ‘purpose’, the Guidebook on Board Effectiveness, which accompanies it, describes a company's purpose as ‘the reason for which it exists’. The FRC explained that establishing a company’s overall purpose is ‘crucial in supporting the values and driving the correct behaviours’. Interestingly, it also noted that ‘companies are recognising the value in defining and communicating a broader purpose beyond profit which generates wealth and delivers benefits to society as a whole’. The G30 Banking Conduct and Culture Report usefully reminds us that purpose statements will also be used to guide employees navigate the most challenging areas of behaviour – the grey zones in which adherence to conduct and values principles is a matter of judgment and not of clear-cut legal requirements.

The mission statements of six of the leading BT companies are set out below:

While all six statements express a commendable commitment to external stakeholders, all but the Apple statement seem to be more like fuzzy marketing slogans than governance tools. To be effective, a company’s purpose needs to be actualised and its values embedded in its corporate strategies, policies, standards and in its board processes. None of these statements would provide sufficiently clear guidance to employees dealing with complex decisions. The other obvious problem is that none of these statements are enforceable. 

Public Interest Purpose

The time is ripe to explore whether BT companies should be required to commit to a public interest purpose and a set of values supporting such a purpose.   Bank regulation might prove a useful exemplar as banks’ public interest is often defined in legislation. In Ireland in 2008, bank directors were required to have regard to a wide array of statutorily prescribed public interest issues including safeguarding financial stability, economic growth, and customer protection.  EU and national banking regulators emphasise the need to improve governance and responsibility. Andrea Enria, Chair of ESMA’s Supervisory Board warned banks against focusing ‘solely on quantitative profit targets, at the expense of integrity, customers’ interests and the long-term viability of the institution’. EU Banks, which are classified as ‘significant’ in terms of size and national importance, are subject to more onerous obligations and more thorough supervision, including cultural supervision, and there is a credible threat of enforcement.

We should not underestimate the difficulty of agreeing a public interest purpose for BT companies– previous attempts to categorise them as digital gatekeepers, public utilities or regulators only serves to reinforce the complexities involved. However, it should be possible to mandate it for those companies which involve the greatest risk. The EU’s proposed Digital Services Act and Digital Markets Act  in a quest to ‘rebalance the rights and responsibilities of users, intermediary platforms, and public authorities’ provide some insight into how this might be done. This ambitious legislation envisages: a board of national Digital Services Coordinators; additional obligations for very large online platforms; measures to deal with systemic risk assessment and mitigation; and oversight and sanctions by the Commission. Including a public interest purpose within such a framework would provide an effective, harmonised EU-wide obligation capable of reining in BT companies and aligning their interests with those of the public.