On January 29, 2001, Timothy Koogle, CEO of Yahoo! Inc. was accused of war crimes for allegedly denying the Holocaust. His accusers were a group of French Nazi concentration camp survivors, The Association of Deportees of Auschwitz and Upper Silesia. The underlying basis of the allegations occurred when Yahoo failed to obey a French court order directing it to block access to neo-Nazi content on its U.S. based servers. Yahoo's position was that the court order violated international and U.S. free speech laws. However, Yahoo was not simply a U.S. company. At the time of the suit, Yahoo had 24 international sites, and at each of these local international sites, Yahoo developed local sites. Approximately 40% of Yahoo's users at that time were from outside the United States. Yahoo France was established in 1996 and was a 70% owned subsidiary of Yahoo. Yahoo France was the first major French-language internet portal. In April 2000, La Ligue Contre Le Racisme et l'Antisemitisme (LICRA) and the Union of French Jewish Students filed suit against Yahoo for allowing users to post Nazi-era memorabilia for sale on Yahoo's auction site. Yahoo had restricted those sales from Yahoo's French language portal, which it believed was sufficient to comply with French laws forbidding the display or sale of items that might incite racial hatred. However, since U.S. Yahoo could be accessed from France, LICRA maintained that Yahoo was still violating the law. The French court agreed and ordered Yahoo to block French users from being able to access the U.S. cite's display of auctioned Nazi memorabilia. Yahoo began to screen some memorabilia, but did not screen by nationality. On December 21, 2000 Yahoo filed suit against LICRA in a U.S. court arguing that complying with the French order would violate the First Amendment. LICRA responded that the U.S. court did not have jurisdiction, but the U.S. court maintained that it did.
Yahoo has a number of opportunities by establishing subsidiaries in foreign countries that maintain majority ownership. Obviously, the subsidiaries bring about the possibility for a huge possibility of profit. However, they also subject the U.S. company to liability for legal violations in the host country. Yahoo and companies like it could avoid these problems through different types of ownership arrangements that do not leave the American parent company as owners of the foreign subsidiary. However, in this particular scenario, it does not appear that a different ownership arrangement would have really made a difference, since the dispute was with the content carried by the American version of the company.
From a stakeholder's perspective, Yahoo's social responsibility is a very complex issue. First, one must consider who Yahoo's stakeholders are. Obviously, Yahoo shareholders are stakeholders, as are Yahoo's advertisers, and Yahoo must consider the financial impact of its behavior on those two people. However, Yahoo transmits a significant amount of information around the world. It is not an overstatement to suggest that all internet users are potentially Yahoo stakeholders. For those people, freedom of speech may be an incredibly important issue, not necessarily because the stakeholders believe in the spreading of hate speech in any way, but because they are concerned about the slippery slope that might occur if internet providers restrict their communication. The concern of these stakeholders, who were very worried about the French court's initial decision is, "How can one jurisdiction decide what can or cannot be displayed on the World Wide Web" (Guernsey, 2001). Moreover, the concern is about precedent, if one country can determine that this type of speech is illegal and offensive and prohibit it, then another country can prohibit other types of speech, for example information about breast cancer or HIV / AIDS because they consider the content to be sexual.
On the other hand, many of Yahoo's stakeholders, particularly outside of the United States, are far more concerned about the impact of behavior that can be viewed as promoting hate speech than they are about the idea of promoting and protecting free speech. There is an obvious, inherently irreconcilable conflict between those two positions. That conflict does not even begin to take into account the interests of a third group of Yahoo consumer stakeholders- the people who want to be able to access hate speech material through Yahoo's server. These people may have an academic interest in hate groups, though most of them are interested for less noble reasons but they are not an insignificantly sized group and they are part of Yahoo's stakeholders. Do their interests count in this scenario, or, because their motivations are distasteful, should Yahoo fail to consider them when assessing stakeholder needs?
While the underlying ethical scenario is complicated, in this scenario I believe that Yahoo failed to act in an ethical manner. To say that Europe was devastated by the Nazis during World War II is an understatement. To say that European countries have a very legitimate fear of the destructive power of hate speech, given how the Hitler and the Nazi party rose to power is a gross understatement. To imply that American ideals about free speech are superior to the rights of minorities to be free from persecution, and that American companies should be able to impose American ideals in foreign lands by making the decision to open for-profit business enterprises in those countries is insulting. In this scenario, Yahoo simply failed to behave in an ethically and socially responsible manner. It was aware of the legal requirements of doing business in France and failed to adhere to those legal requirements; moreover, the case study information suggested that screening users for nationality would have been relatively simple and inexpensive. Even more than its legal duty, Yahoo failed to recognize its ethical duty. The people of France determined that this type of broad-based anti-hate-speech legislation was necessary to prevent any type of recurrence of Nazi-era minority persecution. In no way were these laws somehow morally inappropriate laws, so that violating them could be seen as an ethically proper thing despite being illegal. Yahoo was not acting as either Gandhi nor Martin Luther King, Jr., did, promoting the peaceful and passive resistance to laws used to discriminate against vulnerable minority groups, but actually engaging in behavior that carried a risk of increasing minority persecution. Eventually, the U.S. courts seemed to take that same position, though the justices were still concerned about First Amendment issues, the Ninth Circuit Court of Appeals overturned the trial court's decision granting judgment in favor of Yahoo (Center for Democracy & Technology, 2006).
Yahoo eventually decided not only to exclude Nazi-era memorabilia from the company's French language-portal, and actually to adopt an international policy against the sale of that material. That policy theoretically would help Yahoo comply with the French court's order. However, Yahoo may have chosen a strategy in which it chose not to comply with laws in countries that have censorship. It could have closed down its locations in those areas. It seems highly doubtful that, had Yahoo not had a for-profit business in the country, the French court would have attempted to reach Yahoo through its court system, but French customers would still have been able to access Yahoo as the case described them being able to do by circumventing any prevention strategies. This would have allowed Yahoo to comply with its theoretical commitment to free speech without violating local laws. However, the problem with this strategy is that it may have seemed insensitive to people who are offended by the idea of the sale of the Nazi memorabilia. The other strategy that Yahoo could have done was to mount a comprehensive challenge of the French law under the argument that it was not promoting hate speech by allowing the sale of Nazi memorabilia through its site. It certainly seems that there would be legitimate non-hateful reasons for people to buy and sell Nazi memorabilia. It seems like Yahoo could have made those arguments in the French court, but it does not appear that it took that approach. However, making that argument might have made it appear like it was somehow promoting the buying and/or selling of hate speech and related material. In fact, Yahoo would face criticism for endorsing hate speech for any action short of refusing to sale such memorabilia or host those sites.
As far as the consequences if Yahoo had complied with LICRA's initial demands, I simply do not foresee the level of danger that other people suggest would have occurred. Internet providers, like Yahoo, already refuse to transmit certain information, such as child pornography, and make this part of their terms of service. While this material still manages to be distributed through the internet, having a meaningful policy that actively prohibits transmission protects the company and also respects that many people find such material to be morally and ethically reprehensible. I simply do not think that Yahoo would have seen any tremendous negative business consequences had it simply willfully complied with LICRA's demands. After all, if…