Israel-Hamas War: Why Corporate America Went Quiet After Expressing Outrage After Oct. 7 Terror Attacks

While some companies have denounced “cycles of violence,” others have gone quiet and discouraged employees from weighing in publicly on the war. Companies are in a tough spot as passions run high and sympathy for Israel erodes amid a rising civilian death toll and humanitarian crisis in Gaza. Firms face competing pressures—both to stand up for Palestinians and back Israel in its fight against terrorism and Hamas. Employees in some cases are pressing companies to take sides through public campaigns, petitions, and boycotts.

The war is just the latest divisive situation for companies, following culture-war issues like
Walt Disney’s
(ticker: DIS) stance against Florida’s “Don’t Say Gay” law and Bud Light’s marketing with a transgender activist. Corporate responses to this war, moreover, aren’t just a domestic concern—they have the potential to affect employees, customers, and business worldwide.

“Companies are struggling because people have very polarized, entrenched, and personal opinions on this,” says Dave Fleet, head of global digital crisis at public-relations firm Edelman. “It’s very nuanced,” he adds, and “companies have found that a one-sided position hasn’t aged well.” 

While this is the second major war to erupt in recent years, it is proving far more divisive than the Russia-Ukraine conflict. In that war, most multinationals quickly exited Russia after its invasion of Ukraine. Sanctions nudged them out, along with social-media campaigns and vast public pressure to quit the country.

The Israel-Hamas war isn’t perceived as black-and-white, says Marko Papic, chief strategist of investment firm Clocktower Group. “With Russia, you had one very strong side attacking another, Ukraine, that was weak,” he says. “That aligned with our moral conceptions of right and wrong.” With Israel and the Palestinians, he adds, “you can make an argument that both sides are victims.”

Aside from its impact on oil-and-gas supplies, the Middle East isn’t nearly as economically consequential. Russia’s invasion of Ukraine upended global energy and agriculture, stoked inflation, and triggered geopolitical realignments. Israel’s economy has suffered mightily, but it is tiny on the world stage. Financial markets have shrugged off the conflict. Even energy markets haven’t reacted, partly because there is no talk of an Arab oil embargo or other coordinated attempts to disrupt supplies. 

Still, the war is intensifying tensions over corporate and U.S. government policies toward Israel and fueling both anti-Semitism and anti-Islam hate speech more broadly. Revolts over corporate positions have broken out among employees at
Alphabet’s
(GOOGL) Google division and Starbucks (SBUX). Industries such as entertainment and fashion are also getting ensnared. 

Some companies are urging workers to avoid public statements on the topic. Publishing firm Hearst, for one, recently warned employees “to consider the impact that a controversial statement on a hot-button issue may have on Hearst’s reputation,” according to a staff memo seen by the Washington Post. Hearst declined to comment. 

Some corporate leaders argue that addressing the conflict publicly doesn’t accomplish much and that it’s almost impossible not to anger a faction of “stakeholders,” including employees, shareholders, and customers. “I think it is important to emphasize that only individuals can have opinions,” said Thomas Peterffy, founder and chairman of
Interactive Brokers Group
(IBKR) in an email to Barron’s. “As a company, we have always stayed away from trying to influence the opinions of our stakeholders on any subject concerning politics or religion.”

Social media and artificial intelligence are complicating this conflict—and reactions to it—in ways not seen before. Israel and Hamas have battled often, but the last time Israel invaded Gaza, in 2014,
Facebook,
Instagram, and Twitter, now X, weren’t as powerful in shaping public opinion or spreading misinformation; TikTok didn’t even exist. AI now has the potential to disseminate fake video and imagery. Anti-American propaganda, designed to promote discord, has proliferated on social platforms from enemies such as Russia. 

According to data-analytics firm Cyabra, a quarter of the social-media profiles that posted or discussed the war right after the attacks were fake pro-Hamas accounts. The spread of misinformation is putting companies in damage control faster. A social-media storm erupted recently over a report that the luxury brand Dior had fired Arab-American model Bella Hadid over her comments expressing sympathy for Palestinians, replacing her with an Israeli model for a Christmas ad campaign. The report was false; Hadid’s contract with Dior ended in March 2022.

“There’s a lot of bot-swarming going on,” says Fleet. “Someone will be in a news cycle and they’ll be the target of a large number of inauthentic accounts.” 

Social-media platforms are also amplifying the perception of widespread divisions. Polling by YouGov indicates that U.S. support for Israel is stronger in public opinion surveys than what’s found on social media, partly because the digital platforms skew younger and feature more militant content. 

Amid the public shouting, companies are trying to walk a tightrope. 

At Alphabet, CEO Sundar Pichai has condemned the Hamas attacks as terrorism, expressed support for Israel, and said, “[We] are watching with dread as Palestinian civilians in Gaza have suffered significant loss.” The company is trying to create a “culture of empathy” for all Googlers, including Arabs, Muslims, and more than 2,000 employees in Israel, he said in a message. 

That hasn’t gone over well with some employees, who have protested publicly and wrote an open letter calling for the company to stop providing support for Israeli “apartheid” and “genocide.” They have also revived calls to cancel Google’s business with the Israeli government, including Project Nimbus, a $1.2 billion cloud-services contract. A spokeswoman for Google said opposition to the project is “part of a longstanding campaign by a group of organizations and people who largely don’t work at Google.” She added that Nimbus “is not directed at highly sensitive or classified military workloads relevant to weapons or intelligence services.” 

Starbucks has also run into trouble. Shortly after the attacks, a union representing 9,000 of its workers posted a tweet on X expressing “solidarity with Palestine” and shared similar content online. Starbucks, which has long battled the union, has since sued the organization, claiming trademark infringement and damage to its business. The union has countersued, saying in a court filing that Starbucks defamed it by implying it supports “terrorism, hate, and violence.” A spokeswoman for Starbucks pointed to previously issued statements.

Peterffy, overseeing a brokerage with more than two million accounts in over 200 countries and territories, says he thinks it’s best to avoid commenting on the war. His firm has made contributions to humanitarian causes, he says, “but whenever the topic arises, I always try to convince our people to do these things individually and not discuss it in the office.” Divisive issues can undermine employee cohesion, in his view. “Introducing controversial topics can only loosen that cohesion and it will not serve our purpose,” he adds. 

In contrast, executives like Alex Karp, CEO of data-analytics firm
Palantir Technologies
(PLTR), are delivering full-throated support for Israel. Palantir sells intelligence software tools to the U.S. and many Western allies. Karp has long framed the defense business in moral terms as a fight against terrorism and other threats to the West. “We’re on the front line fighting what amounts to evil,” he said on the company’s recent earnings call.

One question is whether the protests will amount to much more than employees exercising free speech. It’s one thing to vent in public or quit in protest; it’s another for companies to give up revenue over the issue, such as canceling contracts with Israel. If Google took that step, for instance, it could lose cloud and AI business to competitors. Google could also lose revenue from clients protesting its cancellation of Israeli business.

The tech industry may have the most at stake. Israel has long been a start-up hub for tech, launching companies like
Mobileye Global
(MBLY),
Amdocs
(DOX), and
Check Point Software Technologies
(CHKP). The cybersecurity industry has strong ties to Israel, and nearly every major tech company does business in the country, which has a vast pool of software and engineering talent. 

Nonetheless, significant boycotts of companies supporting or doing business with Israel aren’t likely. In the last successful consumer boycott, over Bud Light, a marketing campaign with a transgender activist alienated the beer’s core market. “This is very different,” says Neil Saunders, a consultant with GlobalData Retail. “The issue is too far removed and nuanced, and doesn’t impact people’s day-to-day lives enough to support a successful boycott.”

Still, companies may be looking warily at elite universities where the war has divided students and faculty. Long before this conflict, there was widespread criticism of Israel in the diversity, equity, and inclusion movement on campuses, according to a 2021 study by the conservative Heritage Foundation. Now, student support for Palestinians, combined with a rise in anti-Semitic incidents, is threatening repercussions from alumni donors. 

Bill Ackman, a prominent hedge fund manager, has castigated his alma mater, Harvard University, for not doing enough to combat anti-Semitism in the wake of the Oct. 7 terrorist attacks. Other prominent alumni of Ivy League schools, including Harvard, Columbia University, and the University of Pennsylvania, are threatening to pull donations over a perception that the schools have become hotbeds of anti-Semitism. All three universities have denounced anti-Semitism and said recently they are forming task forces to address it. 

With the situation so fluid, Fleet says companies should simply focus on employees, provide humanitarian support, and avoid getting drawn into the politics. “There is no blanket responses to these kind of situations,” he says. “Just make sure you don’t do anything to fuel the fire.”  

Write to Daren Fonda at [email protected]