Across the Board
Big Tech’s Legal Reckoning Raises the Stakes for Board Oversight
A series of lawsuits has created a new de facto regulatory regime as courts order companies like Meta and Google to change their business practices, and pay up
“For decades, tech giants grew at breakneck speeds as Congress struggled to keep pace with the consequences of the companies’ rapidly booming businesses. But a new de facto regulatory regime has emerged over the past year as courts clobber the biggest internet companies. And for the first time, their product designs and their advertising models — which critics say treat users like products — are costing the companies serious money. The latest blow came on Wednesday, when a New Mexico judge ordered Meta, which owns Facebook, Instagram and WhatsApp, to pay a record $25 billion penalty for abusing consumer privacy. In a 20-page ruling, the judge scolded the company for deceiving consumers and allowing their data to be harvested by the political consulting firm Cambridge Analytica.... The decision, and others like it, amount to a comeuppance for tech behemoths, whose fortunes have been built on the business model of winning the attention — and data — of users. Now, trials and court decisions have laid bare many of the allegations over deceptive and harmful business practices that critics have said long propelled the companies’ growth." NEW YORK TIMES
Tata Group Power Struggle Raises Questions Over Who Really Holds Control
Boardroom tensions expose competing interests of the Tata family and the chairman of India’s largest conglomerate
“The control of the Tata Group is entering a decisive phase. Noel Tata is struggling to clear regulatory hurdles to convene the Sir Ratan Tata Trust (SRTT) board and secure representation at Tata Sons’ annual general meeting (AGM), while chairman N. Chandrasekaran’s camp accelerates preparations for an initial public offering (IPO). Their objectives could hardly be more opposed—Noel wants Chandrasekaran out and Tata Sons to remain private, while Chandrasekaran wants to comply with the Reserve Bank of India instruction, which demands a listing and that could create a more independent board, dilute the influence of the principal shareholder, Tata Trusts, and weaken the Noel Tata family’s hold over the group.” FORTUNE
Anthropic’s IPO Puts Opaque Governance Structure Under Scrutiny
Little-known five-member trust holds significant authority over board appointments and major corporate decisions ahead of AI company’s IPO
“When Anthropic gathered public-market investors recently to whet their appetites for its initial public offering, executives highlighted ballooning revenues and rapidly advancing technology. On Sunday, the company unveiled a plan to put 5% of Anthropic’s shares into a fund that could be used to make donations to nonprofits or support its mission in other ways. But details surrounding one important aspect of the artificial-intelligence company remain largely under wraps: the opaque trust empowered to shape its board and block major moves. Anthropic’s Long-Term Benefit Trust holds enormous sway over the company and is governed by documents that haven’t been divulged. While investors run the show at most public companies and maximizing profits is the priority, Anthropic is set to be one of a few such companies established as a so-called public-benefit corporation—and even more unusually, steered by a trust." CNBC
OpenAI Foundation Names “AI Doomer” to Board as Safety Concerns Mount
Paul Christiano, a vocal advocate for stronger AI safeguards, joins the nonprofit board as scrutiny of AI governance grows
“OpenAI has appointed to its foundation’s board a senior US government official who warned that advanced versions of AI could kill ‘most people’ without more robust safeguards. Paul Christiano, who tests model safety at the commerce department’s Center for AI Standards and Innovation, said on X on Wednesday that the risk of losing control over AI systems ‘is now acute’ and requires more work to align with human interests…. His appointment follows criticism over OpenAI’s handling of a cyber attack by its AI agents on AI model and data repository start-up Hugging Face, as influential figures from Silicon Valley to Washington — including White House adviser David Sacks and Meta chief executive Mark Zuckerberg — warn of regulatory capture by frontier labs…. Christiano’s appointment marks a growing effort by AI labs to bolster their expertise in safety and regulation by hiring from academia and policy groups following high-profile cyber security incidents that triggered calls for government intervention.” FINANCIAL TIMES
Are Boards as Prepared for AI and Cyber Risks as They Think?
Survey highlights a disconnect between directors’ confidence in oversight structures and the expertise needed to navigate evolving threats
“In the June survey of more than 200 directors at U.S. companies in a wide range of industries, board leaders expressed high confidence in the systems they had put in place to keep companies on the right track with AI and cybersecurity. Eighty percent of respondents said their board had ‘a clear governance framework for overseeing AI adoption and cybersecurity risk,’ with 20% saying theirs didn’t. Thirty-six percent of directors were very confident their boards had ‘the right skills and experience to oversee AI, cybersecurity, and data governance,’ while 49% were somewhat confident and 15% were not confident. When it came to grading their executives’ ability to ‘identify and integrate needed emerging technologies and mitigate evolving cybersecurity risk,’ 88% were confident that managers had the necessary expertise to do the job, while 12% weren’t.” CYBERSECURITY DRIVE
Effective Board Chairs Turn Governance into a Strategic Advantage
Effective chairs create an environment where directors can challenge management, navigate difficult decisions, and exercise meaningful oversight
“The chair serves as the board’s orchestrator and leader among peers. He or she helps decide what merits the board’s attention, maintains strong working relationships among directors and with management, builds a special rapport with the CEO, and ensures important issues surface in the right forum. Chairs serve as the bridge between the board and leadership when hard decisions must be made. Yet in Russell Reynolds Associates’ 2025 Global Board Culture and Director Behaviors Study, only 67 percent of respondents said directors on their boards often or always cultivate relationships with the CEO, and 52 percent said the same of executives beyond the CEO. The study also found that spending more time on board priorities does not necessarily translate into results.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Opinion: General Counsel’s Critical Role in Ensuring Boards See the Whole Picture
Recent Delaware ruling underscores the importance of timely, complete information and the general counsel’s role in ensuring meaningful board oversight
“A recent ruling from the Delaware Court of Chancery demonstrates that delivering accurate materials to boards of directors isn’t enough. Someone must ensure the directors see what matters while they can still act on it, and that general counsel is usually best placed to do that. In Dodiya v. Franklin, the court became the first to apply the good-faith and gross-negligence requirement in last year’s amendments to Section 144 of Delaware’s corporation law to a merger in which a director had a conflict of interest. The statute requires three things: The key facts must be disclosed to or known by every member of the approving board or committee, a majority of the disinterested directors must vote to approve, and the approval must be given in good faith and without gross negligence. Management, working with the company’s general counsel and outside advisers, usually decides what directors see and how issues are presented. Yet responsibility for whether directors understand the decision often belongs to no one.” BLOOMBERG LAW
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