Morning Wire - Target Shareholder Lawsuit & UK Immigration | 8.12.23

Episode Date: August 12, 2023

A conservative group sues Target over not maximizing profits, immigration issues in the United Kingdom, and Zoom’s terms of agreement raise privacy issues. Get the facts first with Morning Wire. Learn more about your ad choices. Visit podcastchoices.com/adchoices

A conservative legal group is taking aim at Target, claiming that the company pushed the interest of their shareholders aside by marketing LGBT merch in June. We break down the case and other similar lawsuits. I'm Georgia Howe with Daily Wire Editor-in-Chief John Bickley. It's August 12th, and this is a Saturday edition of Morning Wire. Asylum seekers flowing into the United Kingdom have been put on an offshore barge,

as the number of migrants has overwhelmed available high. housing. What it sends is a forceful message that there will be proper accommodation, but not luxurious. How are locals reacting and how long will the migrants be housed on the ship? And the video communication software Zoom stirred up controversy this month when they updated their terms of service to include a clause regarding AI. I think the line between what they consider their information and what they consider your information is really not well spelled out in the terms service. What's behind their customers' anger and how is the company responded? Thanks for waking up with Morning Wire. Stay tuned. We have the news you need to know.

A conservative legal group is suing target over LGBT merchandise it marketed in June. The group claims the company knowingly put political activism ahead of its fiscal duty to shareholders. Here to tell us more about the lawsuit is Dately Wire Culture reporter Megan Basham. So, Megan, what exactly are the grounds for this suit? Well, you know, most of the people will probably remember that back in June, Target released a special lineup of LGBTQ-themed products and that those caused a lot of controversy. So the items included tuck-friendly bathing suits, some toddler board books with titles like Bye Bye Binary. And then this was probably the biggest thing, a quote unquote queer themed clothing and accessories line from a designer who describes himself

as a Satanist. Well, the backlash to all of that was fierce and Target. removed some of the items from their stock. After that, shares of Target really just tanked. Now, was the drop in stock definitively linked to that PR issue? Well, you know, a lot of legacy media outlets reported that it wasn't due to that. They said that broader retail market woes were to blame. CNN, for instance, quoted an analyst who said, and I'm quoting here, retail is just very out of favor right now, so all the stocks in the sector are overcorrecting. And the outlet concluded that the cause of the drop was Target's primary shopping base of middle-income households have been pinched by rising costs and inflation. Now, on the other side of that, Smead Capital,

which is a prominent investment manager, said in its second quarter letter to investors that Target was our worst performer in the quarter, primarily driven by customers and public reaction to those in-store promotions for the month of June. Well, I spoke to one analyst on background who agreed with that. He pointed out that Amazon, Walmart, Costco, really a number of other major retail stocks were moving up just as Target was taking a dive. And Target itself was trending up before the Pride controversy. So the premise is that the Pride merchandise actually caused the losses and that's the basis for the suit. Exactly. So this suit was filed by America First legal on behalf of shareholders.

And what they're saying is that in its 2022 and 2023 proxy statements, Target told shareholders that it was monitoring for risks that might stem from its social and political messaging. This was the group announcing that suit. Stephen Miller here, President of America First Legal. We just filed a federal shareholder lawsuit against Target following this disastrous pride propaganda that erased billions in shareholder value. We are fighting ESG extremism. Now, in their statement announcing this, they wrote, quoting here,

management only cared whether it's left as stakeholders were satisfied, disregarding the possibility that its customers and shareholders might feel differently. This predictably caused more than a $12 billion collapse in share value, the largest stock price decline in over 20 years. Target's management has misled investors, assuring them that the corporation oversees social and political issues and risks to protect shareholders. Now, what's the likelihood of the suit actually gaining traction? Yeah, that's a good question. So AFL's president is Trump administration veteran Stephen Miller.

So you're certainly hearing a lot of people calling this a political stunt. But publicly traded companies are required to disclose certain information in their proxy statements so that shareholders will understand the risks that they're running and can make informed a decisions. Target also has a fiduciary duty to protect shareholders' investments. If it knew it was seriously risking that, that really is a legitimate issue. And this is kind of a rising trend in attacking ESG policies. Starbucks, for instance, saw a similar suit last year. The outcome of that one is still pending, and also a good chance that one of these cases will end up in front of SCOTUS. All right. Well, Megan, thanks so much for reporting. Anytime.

Immigrants arriving in the United Kingdom from the English Channel are being put on a large barge docked off the coast. The move highlights the growing number of asylum seekers arriving in Great Britain and the challenge of housing them. Joining us to discuss is Radamir Tile Coat Director of Research at the London-based Legatum Institute, Hilarato. So the British government has started housing illegal migrants on a barge. First, give us a little background on immigration in the UK? Well, just as in America, where there are migrants spilling across the southern border in large numbers, the UK has its own southern border crisis, because thousands of illegal migrants or undocumented migrants, as we are now encouraged to call them, arrive in the UK from across

the English Channel in so-called small boats, which are often not actually that small. Now, around 46,000 people crossed the English Channel in small boats in 2022. That's a number that's increased rapidly over recent years. Although they board boats in France, the migrants frequently come from Albania, as well as Iran, elsewhere in the Middle East, and North Africa. That 46,000 number, of course, may not sound as significant as the numbers you see in the States, but keep in mind, the UK is only about a fifth of the population of the US, so that's a huge challenge to absorb that many arrivals. And that brings us to this week. The British government has announced that they will house hundreds of male migrants on what has been called a prison barge currently moored on the coast of Dorset

in England's southwest. Now, in an update to this story, migrants are being temporarily removed from the barge because of the discovery of legionella bacteria, which can cause legionnaires disease in the barge's water supply, although it has been emphasized that this is simply a temporary measure, and once this is dealt with, they should be moved back onto the barge. Is that to avoid having them come into the country or detain them, or is this primarily just a housing arrangement? Well, this is essentially an alternative to a hotel because the men on board will be able to leave at any time. There are buses every hour to the nearby coastal town of Weymouth. If they miss that last bus home, they get free taxis.

There are other perks to make life on the ship more pleasant, like free hiking, like trips to cricket matches, a gym, movie room, 24-hour food service, and officials say this will all help them integrate into the local community. The barge itself should hold up to 500 men who are awaiting asylum decisions, and it's meant to cut the number of migrants that the government puts up in hotels at the British public's expense. Currently, taxpayers are paying £6 million a day to house 51,000 asylum seekers in those hotels. So not cheap. Now, the 500 or so male residents will be sleeping on this ship offshore, but integrating into the local community during the day. How do locals feel about that?

Well, naturally, they're concerned about hundreds of men arriving in their town. One woman who was interviewed by a newspaper said that she was nervous, being a woman going to the beach with all those men around, but that she is afraid she will be called a racist if she voices those concerns. So really fear of pushing back on the policy there. How significant is the broader immigration issue in the UK? Actually, I think it's very comparable to the situation in the United States. In the UK, under Prime Minister Rishi Sunak, immigration has been rising. Last year, there was net migration of over 600,000,

and that's to the growing fury of many conservative voters who thought that Brexit would reduce migration by bringing national borders back under national control. But what's happened is that so far plans to reduce that immigration have been hobbled by, in the first instance, corporate lobbying for continued cheap foreign labor, and there's also resistance from within the government bureaucracy. And I'm afraid small boat migrants have been arrested for rape and other crimes, including in those counties along the South Coast where they land. But addressing that migration has become especially politically fraught, as left-wing politicians, as well as judges, continue to fight against

attempts to stop it. Right. We've seen reports to that effect. Has the government tried to actively reduce the flow of migrants, or is everyone who arrives basically accepted? Right. So what the government has tried to do is to send small boat migrants to Rwanda for processing. And that was based on Australia's successful scheme when arrivals were processed on the island of Nauru. That strategy was also successful, by the way, in reducing human trafficking as well. Now, on Monday night in the UK, lawmakers passed the government's illegal migration bill. that will allow for arrivals to be detained and sent to Rwanda or another safe third country.

But that process was ruled unlawful by the Court of Appeal. So Prime Minister Sonak has said the government will seek to take the case to the UK Supreme Court. So these are strange times indeed. Yeah, on both sides of the pond. Radimir, thanks for joining us. Thank you for having me. That was Radamir Talcott of the Legatum Institute. The video meeting platform Zoom caused a stir this month

when a change of their terms of service left customers outrage that the company was using their face and voice to train AI algorithms. Here with more on the scandal and how Americans' views toward AI have shifted is Daily Wire Senior Editor Cabot Phillips. So Cabot, this story really blew up earlier this week. Give us some background. Yeah, this is a wild story. So this week, the website's Stack Diary made waves after publishing a blog post digging into the terms of service for Zoom, the massively popular video conferencing app that went making. stream during COVID lockdowns. While the terms include standard language and disclaimers, they also include a number of passages that grant the company broad rights to user data, including

their images and voices. For example, one portion says Zoom has the rights to users, quote, data, content, files, documents, or other materials. But the section that really turned heads says Zoom has a perpetual worldwide royalty-free right to your data for the purpose of product development, including, quote, machine learning and artificial intelligence. Yeah, you can see why people were spooked and wanted to know how exactly their faces might be used to help develop AI. Now, the company had actually implemented the new terms of service back in March, but as we all know, very few people, myself included, actually read all the fine print when clicking accept. It wasn't until this week that anyone seemed to notice. But now that the details of the

terms are public, there was understandably mass outrage online with people accusing the company of violating their privacy. Right. You can see why. Now, tell us how Zoom execs responded to that. So they've definitely been on the defensive. The company's COO issued a statement saying users will be notified when their images or audio are being used for, quote, product improvement purposes. But that did little to assuage the fears of many users. In response, the company went a step further, adding a new line to their terms of service that reads, quote, for AI, we do not use audio, video, or chat content for training our models without consumer consent. But it's worth noting the carefully worded language in those revised terms. While they do promise not to use audio or video content to train their AI models,

intellectual property lawyers have pointed out that they'll still technically be allowed to use a vast trove of other user data. While some say it's simply the tradeoff you make when using high-tech software these days, plenty more folks say it's a violation of user privacy. This all comes at a time when Americans are increasingly skeptical of AI technology more broadly for this very reason. Right, well, there's been some interesting polling on that front. Tell us a little bit about that. So according to a poll earlier this summer from Roy, 61% of Americans believe AI poses a risk to humanity.

And there was bipartisan agreement on the issue as well, with 70% of Republicans and 60% of Democrats expressing concern. And there was also clear consensus across party lines in supportive regulation in the industry, just not regulation coming from tech companies themselves. 82% say they do not trust AI leaders to self-regulate. The majority of Americans say they'd instead prefer government regulation of some kind, and they're likely to get their wish.

Congress has been working feverishly in past months to regulate the industry. Expect to hear much more on that front in the coming year. Well, I'm feeling vindicated that I refused to download Zoom all through the pandemic. Cabot, thanks for reporting. Anytime. That's all the time we've got this morning. Thanks for waking up with us. We'll be back this afternoon with an extra edition of Morning Wire.