On Wednesday, top officials from Google, Facebook and Twitter will testify before Congress about the scourge of fake news and foreign interference in the 2016 election process. The highly anticipated hearings have been previewed as a major step towards more transparency in political speech, but the track record of such efforts on Capitol Hill is discouraging. It feels the time has come for investors to take matters into their own hands.
The United States was founded on the notion of transparent government. Article I of the Constitution requires Congress to legislate in public. When it comes to political advertising, disclosure of who is disseminating information – fake or otherwise – can mitigate the negative effects on voters. Full disclosure of the actual individuals contributing money – not front groups – also should apply to every kind of federal electioneering.
Transparency is the only way to put the brakes on those who are anonymously trolling our democracy. We've seen it work.
A 2013 study from the Yale Institution for Social and Policy Studies shows that voters benefit from disclaimers revealing the individual contributors behind advertisements. The study suggests attack ads lose their bite as more and more viewers gain information about the donors behind the ads – actually becoming more supportive of the attacked candidate after viewing the donor information.
And this theory has been shown to be accurate at the polls. In a 2012 paper, University of California – Irvine School of Law Professor Richard Hanson describes how California voters turned down a ballot proposition benefitting a large private electrical utility ("Yes on 16" campaign), once they learned that almost all the money funding ads in favor of the proposition came from the utility itself.
Given that transparency in political information has been proven to have such a beneficial effect, why has Congress refused to act? Just ask the GOP.
In 2010, Senator Mitch McConnell was successful in scuttling the DISCLOSE Act – which, among other things, would have mandated disclosure in election advertising, including revealing the top five individual donors to a group making campaign contributions. That would be the real people behind the ads rather than the blandly named front groups, such as Citizens for Strength and Security (funded largely by labor unions) or Citizens for Better Medicare (mostly financed by the pharmaceutical industry).
Lack of disclosure has allowed the explosion of "dark money" political advertising and fake news that dominated social media during the 2016 election. In response, Democratic Representative Derek Kilmer of Washington introduced The Honest Ads Act of 2017. This long-overdue legislation seeks to bring our elections into the 21st century by requiring social media companies to publish information about who is paying for political ads.
While the Honest Ads Act is sorely needed, I worry it will never become law.
So I am not waiting for Congress, and I encourage others to join me. As a shareholder in Alphabet/Google, I recently worked with Arjuna Capital to file a shareholder resolution asking the company to report in a comprehensive, serious way on the threat posed by so-called fake news and election interference and how they intend to deal with it. A similar effort is underway by shareholders at Facebook and Twitter, where the "fake news" problem is perhaps even worse.
If shareholder advocacy seems like a roundabout and arcane way to provide more transparency in political advertising, consider that Google, Facebook and Twitter are now the key platforms for Americans to get their information. And while we can't count on Congress to pass laws promoting transparency, there is another kind of law that Google and Facebook can't ignore: the law of the marketplace. If Facebook and Google become dumpster fires of disinformation, their user base could disappear as quickly as it appeared. If you don't believe that, look up the people behind Napster, MySpace and AOL and ask them what it was like to be on top of the world one day and a footnote to history five years later.
So, obviously, Congress should pass the Honest Ads Act to promote more transparent political discourse and a healthier democracy. But shareholders should also urge social media companies to comprehensively address the corrupting influence of "fake news" and the threat it poses to the continued viability of their business models – which are entirely dependent on advertising. Common sense tells us that if you can't trust the search results on Google or your news feed on Facebook, you'll simply stop using these platforms. And the advertisers will take their dollars elsewhere.
Krist Novoselic is an American rock musician, and was the bass guitarist and founding member of the grunge band Nirvana. His newest band is called Giants in the Trees.