Today, National Legal and Policy Center presented a “Report on AI Data Usage Oversight” proposal at Microsoft‘s 2025 annual shareholder meeting.
The proposal requested the Company to increase its reporting of the risks of “unethical or improper usage of external data in the development and training of its artificial intelligence offerings” and to disclose what safeguards the Company has in place. NLPC’s concerns include ongoing copyright lawsuits and increasing regulatory risks, Microsoft’s relationship with OpenAI, and the company’s own history of problematic customer data collection and surveillance. NLPC also noted that Microsoft’s close relationship with the U.S. government is a dangerous concentration of power that presents an opportunity to circumvent Constitutional protections and to collect data on citizens. This proposal received 36% support last year, which is significant for such proposals.
The company’s board of directors opposed our proposal, as explained on page 82 of its 2025 proxy statement. NLPC’s response to the board’s opposition statement was filed with the Securities and Exchange Commission last month. NLPC also opposed the reelection of Microsoft director Reid Hoffman for the third year in a row.
Presenting the proposal at the meeting was Luke Perlot, associate director of NLPC’s Corporate Integrity Project. A transcript of his three-minute remarks follows:
Good morning.
Artificial intelligence is revealing itself as one of the most transformative innovations in modern economic history. AI’s potential to improve everything from healthcare to financial services is undeniable – as are its risks.
As we know, AI thrives on data, which is vast, intricate, and often sensitive. Unfortunately, this hunger for data drives developers to seek out large quantities of information from the internet and other digital sources, some of which may not be obtained ethically or legally.
Microsoft is a leading player in the AI space, thanks largely to its partnership with OpenAI. However, this partnership with OpenAI has also raised ethical concerns.
The two companies have faced legal challenges, notably from the New York Times, for allegedly incorporating proprietary information into its AI models without consent. Microsoft’s LinkedIn has also been sued for using customer information for AI training.
Further, former NSA director Paul Nakasone remains on OpenAI’s board, intensifying worries about government surveillance and the erosion of individual privacy. Additionally, Microsoft moved forward with its “Recall” feature, which takes screenshots of user activity, despite heavy criticism.
Microsoft has also increased emphasis on its own AI models, which increases the need for comprehensive disclosure.
National Legal and Policy Center filed this same shareholder proposal last year. It received 36% support from shareholders, which was strong indication that Microsoft shareholders were concerned that the company’s efforts to protect user privacy in its AI development may not go far enough.
Since then, the company has made minimal changes to its AI reporting. And as I’ve already alluded to, the company has doubled down on some of shareholders’ biggest privacy concerns that were identified in last year’s proposal.
Meanwhile, the stakes have continued to increase. After some debate, the European Union announced it will roll out its stringent AI rules on schedule. And in the US, politicians from both parties have pushed for similar laws at both the state and federal level.
More importantly, AI equity valuations have continued to grow, yet none of the major players have established themselves as the go-to name for privacy focused AI. This is a tremendous opportunity for Microsoft to potentially cement its status as one of the most valuable companies in the world for years to come. More comprehensive AI privacy reporting would be a step towards that goal.
For these reasons, we encourage our fellow shareholders to vote FOR Proposal 7.
Read NLPC’s shareholder proposal for the Microsoft annual meeting here.
Read NLPC’s response, filed with the SEC, to the company’s opposition to our shareholder proposal, here.
