Standing up for our digital rights

Companies need to keep pace with rapidly evolving regulations around our digital rights. Learn how and why we’re exerting our influence around this topic.
February 2022
Lorraine Hau

Lorraine Hau

Associate, Responsible Investment

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The announcement of Facebook’s metaverse presents a clear integration of our online and offline presence. We are increasingly conducting our daily existence in the digital sphere, from grocery shopping to working from home and socialising. Undoubtedly, Covid-19 has acted as a catalyst to our expanding digital footprint. While the convenience has been well-received by some, there is also a growing concern regarding how our data is being used online, specifically our digital rights.

What are digital rights and what is the risk?

Digital rights are an extension of the fundamental human rights covered in the Universal Declaration of Human Rights. Examples of human rights in the digital realm include universal access to information, communication, freedom of expression, privacy, and data protection. As more data is generated, the issue around protection and privacy intensifies. In recent years, digital rights breaches have had widespread impact, such as the Cambridge Analytica scandal, or the incitement to violence in the US Capitol Riots. In conflict-affected countries such as Myanmar, military demands for internet blackouts, surveillance, censorship, and personal information directly infringe on freedom of information, expression, and anonymity.

Regulation on digital rights is constantly evolving

The challenges, complexity and harmful practices of digital rights have led to the evolution of legislative frameworks. The EU’s General Data Protection Regulation (GDPR) in 2018 was a milestone for data protection, giving consumers greater control of their personal data. Similar data privacy laws have now emerged beyond the EU. The EU is paving the way with regulatory crackdown to rein in big tech, with the recent EU Digital Services Act. It aims to hold online platforms accountable for illegal content and algorithmic systems amplifying the spread of disinformation.

This greater regulation is welcomed as big tech companies currently have the power to make decisions on consumers’ freedom of expression and other rights without adequate safeguards. They often operate in an opaque manner with a lack of policies for users to understand their rights, which contributes to the misuse of consumers’ data to generate profit through targeted advertising and algorithms. This has led to calls for better regulation and heightened investor action shown by the rise of shareholder resolutions targeting digital rights risks.

Corporate action on digital rights

What is good practice? Twitter ranks top of the 2020 Ranking Digital Rights Index and is described as ‘the best among the worst’ for its increased transparency on management of government demands to censor content and measures to remove content and account suspension. However, the company still has significant work ahead to achieve best practice status. Telefonica was the only telecommunications company to publish a policy on its responsible use of artificial intelligence, detailing the practical implementation in its operational model.  Despite these developments, overall, tech companies are failing to disclose information regarding how they address digital rights, from content moderation, to how they enforce their rules in practice and collect consumer data, indicating this is a systemic issue that requires imminent action.

Final thoughts

We expect continued scrutiny on companies active in the digital sphere as stakeholder and regulatory momentum advances. These regulations would radically change the business models of these companies; therefore, those wishing to get ahead to limit potential regulatory fines must act now. As investors, we will continue to exert pressure to increase corporate transparency and accountability of digital rights through our involvement in the Ranking Digital Rights collaboration and the Global Network Initiative.

Risk Disclaimer

The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Get to know the author

Lorraine Hau

Get to know the author

Lorraine Hau, Associate, Responsible Investment

Lorraine joined the Responsible Investment team at BMO GAM in 2021 and is focusing on the TMT sector. Before joining BMO, she worked at an investor network raising awareness on sustainability in food systems. When not working, she likes to spend her time practicing yoga and making lopsided bowls in pottery studios.

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