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Apple investor vote sounds 'warning' over China app takedowns

San Francisco 

AN APPLE shareholder proposal critical of the company's app removals in China received a relatively high level of support at the iPhone-maker's annual meeting on Wednesday - enough to push the company to respond, experts have said.

The proposal, which called for Apple to report whether it has "publicly committed to respect freedom of expression as a human right", was defeated, but 40.6 per cent of votes cast supported the measure, according to company figures.

The proposal highlighted Apple's 2017 removal of virtual private network (VPN) apps from its App Store in China.

Such apps allow users to bypass China's so-called Great Firewall aimed at restricting access to overseas sites, and Apple's action was seen as a step to preserve access to the country's vast market.

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Wednesday's vote stood in contrast to previous years, when critics made little headway with big investors on the issue.

"A total this high is a striking warning - and it must have come from big institutional investors, not just retail shareholders - that Apple's human rights policy in China has become a material risk for the company's reputation," said Stephen Davis, a senior fellow at Harvard Law School's Program on Corporate Governance.

"Apple will be under great pressure to respond rather than ignore this vote," he said.

An Apple spokesman declined to comment on the results. Apple had opposed the proposal, saying it already provides extensive information about when it takes down apps at the request of governments around the world and that it follows the laws in countries where it operates.

SumOfUs, the group that put the measure on the ballot, celebrated the totals.

Sondhya Gupta, a campaign manager for the group, said: "Apple's investors have sounded the alarm that (Apple CEO) Tim Cook needs to listen to the concerns raised by frontline communities such as Tibetans and Uighurs, who have long suffered under a tech dystopia."

In the past, Apple shareholders have voted down human rights measures related to China by much larger margins.

A 2018 proposal that urged Apple to create a human rights panel to oversee issues such as workplace conditions and censorship in China was defeated, with 94.4 per cent of votes cast against it.

Sentiment appears to have shifted, experts said.

"Given the high level of support received for the proposal, we expect to see the company engage with its shareholders on the issue and report to shareholders about what happened in the engagements, including any potential actions it intends to take as a result," said Kern McPherson, vice-president of research and engagement for proxy advisory firm Glass, Lewis & Co, which supported the measure.

Apple has signalled it is considering action. In a letter earlier this month to Access Now, an open-Internet advocacy group, Apple's senior privacy director Jane Horvath wrote: "Apple has and always will consider freedom of expression a fundamental human right."

The company, she said, "will consider providing additional details on our commitment in the future."

The proposal was one of six topics to be voted on at Wednesday's shareholder meeting.

By wide margins, shareholders approved Apple's executive pay, existing board of directors and the retention of Ernst & Young as its accounting firm, results that were widely expected.

A "proxy access" proposal to allow shareholders to nominate more than one director to Apple's board was defeated, with 68.9 per cent of votes cast against.

Also voted down was a measure to tie executive compensation to environmental sustainability metrics, with 87.9 per cent of votes cast against it, said the company.

Apple had opposed both proposals. REUTERS

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