Yahoo shareholders have voted down a proposal that would have forced the company to take a harder line against governments’ attempts to limit internet access or curtail freedom of speech.
Holders of only 15.2% of Yahoo shares voted in favour of the proposal at the company's annual general meeting
Yahoo's management had recommended that shareholders vote against the anti-censorship proposal, which was presented by the New York City Comptroller's Office on behalf of the New York City Pension Funds.
The organisation, which owns about $124m (£62m) worth of Yahoo shares was defeated in attempts to pass a similar proposal at Google’s AGM last month.
Yahoo, Google and other internet companies are under pressure from shareholders and human rights groups to resist demands from governments to censor search results that they find politically objectionable.
Critics also want internet companies to refuse governments' requests to turn over information on users when the authorities intend to persecute law-abiding journalists or dissidents.
In April, the wife of an imprisoned Chinese dissident sued Yahoo for divulging information about her husband's internet activity, which allegedly led to his arrest and torture.
The proposal rejected by Yahoo’s shareholders would have required the company to implement a series of policies, such as not hosting individuals' data in countries where political dissent is considered a crime.
It also called on Yahoo not to engage in self-censorship and to use all legal means to resist censorship demands, complying only if legally bound to do so.
But Yahoo’s management said the proposal would give the company "insufficient flexibility" to respond to legal requirements in the countries where it operates. In a proxy statement, it argued that its presence was a positive force toward reform in countries where speech and press freedom is limited.
Yahoo also listed a series of steps it is taking to address internet freedom problems, including participating in policy discussions with private sector peers, governments, universities and other organisations.
The AGM also rejected a proposal to tie executive pay to company performance. The meeting featured tense exchanges between chief executive Terry Semel and shareholders critical of his job and of the company's financial performance.
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