How Can Corporate Leaders Do More to Defend Democracy?

In Brief

How Can Corporate Leaders Do More to Defend Democracy?

In the wake of the assault on the U.S. Capitol, corporate leaders have taken a strong stand for democratic institutions. How does this fit into trends of corporate activism, and what comes next?

President Donald J. Trump’s provocation of the January 6 insurrection against the U.S. government led to a remarkable corporate reaction, with firms taking a strong stand against incitement to violence. But this should not be surprising. The exclusion of seditious disinformation from Trump and others, the chorus of corporate condemnations of his actions, and the suspensions of political contributions to his organizations exemplify how corporate leaders have taken an increasingly active role in public policy debates.

How have corporate leaders reacted to the insurrection?

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CEOs and other corporate officials have issued a cascade of reactions following the assault on the Capitol and as plans for further violence roil cyberspace prior to Inauguration Day. Many corporate executives and industry groups quickly criticized the insurrection and Trump’s incendiary role in it. 

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In unprecedented moves, major corporations including Coca-Cola, AT&T, and Morgan Stanley are suspending or ending their political action committee contributions to members of Congress who voted against the Electoral College’s certification of the November election results. 

But much of the action happened online. Social media giants such as Facebook, Instagram, Reddit, Snapchat, Twitch, and Twitter booted Trump, while YouTube suspended his account. Many Trump supporters have pursued alternate platforms as a game of shutdown whack-a-mole has ensued. Amazon Web Services, the largest hosting service in the market, quickly suspended Parler, the social network popular among conservatives and extremists. Apple’s and Google’s app stores likewise dropped Parler.

Also significant is payment-processing companies denying Trump access to his political and commercial enterprises. Stripe announced that it will no longer process payments for Trump’s campaign website. Shopify and PayPal shut down Trump-associated accounts, including those of some Trump followers who were transferring funds to support the Capitol Hill violence. GoFundMe banned some travel fundraisers ahead of the threatened armed protests leading to Inauguration Day and in the future will “remove fundraisers that attempt to spread misinformation about the election, promote conspiracy theories, and contribute to or participate in attacks on U.S. democracy.”

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Can social media platforms and other tech companies do this? 

Yes—though social media companies have previously tried to avoid such high-profile actions. A short clause in the 1996 Communications Decency Act, Section 230, prevents internet service providers and platforms from being held liable for what their users post.

Trump supporters occupy the US capitol
Trump supporters storm the U.S. Capitol in an effort to disrupt the congressional certification of the results of the 2020 presidential election. Shannon Stapleton/Reuters

At the same time, the First Amendment does not require these private companies to invite any and all speech onto their platforms. The law permits such companies to take actions “in good faith” to moderate and restrict content they consider “obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.” In effect, Section 230 allows private internet companies to moderate, remove, suspend, or ban content “in good faith,” a term so far rarely litigated in court.

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Section 230 has come under attack from both sides: Trump has pushed to repeal it as part of his long-running feud with big tech, while Democrats, including President-Elect Joe Biden, have criticized it for letting platforms off the hook on regulating hate speech and disinformation.

How free are private companies to take such positions on public policy?

Federal law does not prohibit CEOs or boards of directors from addressing public policy issues.  Some could argue that the fiduciary duty to the best interest of the company and its shareholders overrules a firm’s commitment to social causes. But corporate executives’ speaking out on such issues has increasingly been seen as fulfilling a civic or moral responsibility as members of their societies. In fact, the long-term interest of the corporation could actually require it to distance itself from clear violations of, for example, human rights norms or from attacks on democracy.           

How does this fit into the broader trend of corporate involvement in public policy?

In recent years, CEOs have increasingly spoken up on a wide range of public policy issues, including immigration, climate change, racism, human rights, income inequality, electoral integrity, and misinformation and hate speech online and in mainstream media. These are areas with wide “governance gaps,” or disconnects between the seriousness of the problem and the effectiveness of the government’s response. This leaves the field open for the private sector to step in not only with views, but also potential solutions.

The good news is that the antiquated view that corporations should be only self-interested entities is not borne out by emerging research. Following a 2019 report I coauthored with Caroline Kaeb, of the University of Pennsylvania’s Wharton School, our preliminary findings indicate that the “buzz” generated by corporate advocacy seems to have a neutral or slightly positive impact on a firm’s public image. More research is required, but the prospects are encouraging that corporate leaders can speak out on matters of moral urgency without fearing blowback. Indeed, for several years a major global trust survey [PDF] has shown the public expecting corporate executives to speak up and fill voids in governance.

How can corporate leadership do more on democracy?

The corporate actions unleashed in the past week in the defense of democracy point to a future agenda that should include several important steps:

  • Corporate officials should continue to get involved with public policy issues where there are major governance gaps. Maintaining silence in the face of actions undermining core values can encourage further violations that erode the bedrocks of democracy, the rule of law, a livable environment, and an open society.
  • Big tech companies should ramp up their social media content moderation, which will require a persistent moral compass to inform their purpose and operations.
  • The Biden administration should spearhead a reinvigorated dialogue with multinational companies through the State Department’s Internet Freedom and Business & Human Rights (IFBHR) Section, which leads U.S. government policy engagement on business and human rights. This can be a robust channel and fresh framework for the expression of corporate views on public and foreign policy.

In the wake of the shocking events of this January, private companies are doing more than ever to combat threats to democracy, which should be applauded. But legal, moral, and political considerations should lead them to do yet more.

Madeline Babin contributed to this article.

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