Microsoft, Facing Conservative Pressure, Disavows Religion Bias

(Bloomberg) — Microsoft Corp. signed an agreement to put to rest accusations that it used a litmus test to deny software discounts to conservative faith-based groups.

Alliance Defending Freedom, a legal advocacy group involved in the 2022 overturning of and landmark cases tied to religious-freedom issues, alleged that Microsoft withheld discounts to ADF itself and to certain other nonprofits, such as groups that don’t hire LGBTQ people for religious reasons and pregnancy resource centers that don’t offer abortions.

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Investors represented by ADF planned to use the allegations to urge shareholders to ask Microsoft at its annual meeting on Dec. 5 to prepare a report on its discounting practices.

After Microsoft stated that nonprofits don’t need to attest to nondiscrimination in order to get the discounts and won’t need to in the future, the investors agreed to withdraw their proposal. Microsoft’s agreement with the shareholder group, which was viewed by Bloomberg News, was dated Oct. 10. It has not been previously reported.

In a statement to Bloomberg, Microsoft said its discount program is meant for “a broad group” of nonprofits. “We don’t think it’s desirable to pick and choose among these organizations based on ideological orientation. In this instance, we found that a small number of organizations that should have been eligible for these discounts were not receiving them. We’ve fixed this and those organizations are now eligible.”

The agreement comes months after ADF announced settlements of lawsuits it brought against OpenAI and Asana Inc. on behalf of Holy Sexuality, a Christian nonprofit in California. According to ADF, both companies agreed to remove barriers to discounts for religious organizations as part of the settlements. OpenAI declined to discuss the matter, and Asana did not respond to requests for a comment.

“It’s important for Big Tech providers to treat people fairly and to not draw these squiggly lines that say, ‘Well, we’ll give you nonprofit pricing unless you’re a religious group,’” said Alexandra Gaiser, ADF’s senior counsel.

On Nov. 3, Florida Attorney General James Uthmeier sent a letter to Microsoft, which he shared on social media, saying denial of discounts to faith-based groups and pregnancy centers that don’t offer abortions may result in the state taking legal action.

The agreement Microsoft reached with ADF stated that there is no categorical exclusion preventing pregnancy centers from getting the discounts.

Companies have been clarifying their positions on a range of diversity, equity and inclusion issues since President Donald Trump returned to office and launched a campaign to root out what he called “illegal DEI.” LGBTQ inclusion efforts have been a particular flashpoint, with many big employers saying they would drop funding for pride events, eliminate references to gender pronouns, withdraw from a prominent ranking of LGBTQ-friendly workplaces and make other changes in light of regulatory concerns.

“Corporations are coming back to being neutral, profit-seeking entities, which is ultimately what we’d like to see,” Florida’s Uthmeier said in an interview.

There are still many companies that support LGBTQ rights, but the pressure from conservatives is showing how fragile the gains have been, said Fabrice Houdart, founder and executive director of the Association of LGBTQ+ Corporate Directors in New York.

“As soon as the wind changed, the vibe changed,” he said.

For now, the momentum favors conservative initiatives, said Jerry Bowyer, an adviser to Houston financial firm Patron Partners, which was behind the Microsoft shareholder proposal seeking a report on the company’s discounting practices. He said companies that could be targeted by more of these kinds of proposals shouldn’t need to admit past behavior as long as they affirm future commitments to not use belief-based policies as a litmus test.

“That message is resonating and bearing fruit with investor relations and other people we’re meeting,” he said.

–With assistance from Matt Day.

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