Political positioning as an entrepreneur: between attitude and cancel culture

In times of a polarized social climate, entrepreneurs and brands are faced with a dilemma: should they take a public stance on political or social conflicts and thus pursue brand positioning with values – or does their own entrepreneurial opinion entail an incalculable risk through cancel culture? Today, one wrong or one-sided word can trigger a wave of digital outrage. Companies increasingly find themselves caught between the expectations of their customers, who demand authenticity and statements, and the risk of being punished by calls for a boycott. Cancel culture describes the phenomenon of people or companies being publicly denounced and boycotted for controversial statements or actions. This can have serious consequences for companies – including a noticeable loss of sales or lasting reputational damage. In the following, we look at current examples and analyse how company statements can lead to polarization and boycotts, and which legal framework conditions need to be observed.

Current examples: McDonald’s and Starbucks in a shitstorm

A look at two prominent recent cases illustrates how quickly a company’s political positioning in the Middle East conflict can become an acid test for the brand:

• McDonald’s – free meals for soldiers: Shortly after the Hamas terror attack on Israel on October 7, 2023, McDonald’s Israel announced it would donate free meals to Israeli soldiers, hospital workers and emergency personnel. What was intended as a local show of solidarity turned into an international crisis for the brand. Protests and calls for a boycott of McDonald’s took place in many countries, especially by pro-Palestinian groups. Important influencers in Egypt, for example, called for a boycott of the fast food chain. At the same time, McDonald’s franchisees in Muslim-majority countries such as Saudi Arabia, Kuwait and Turkey publicly distanced themselves from the actions of the Israeli offshoot and emphasized their support for humanitarian aid for Gaza instead. The global corporate headquarters felt compelled to react: In January 2024, McDonald’s admitted that the Israel-Hamas war had a “significant impact” on its business – an indirect acknowledgement of the economic damage caused by boycotts. Finally, in April 2024, McDonald’s took over the Israeli franchise (225 branches with over 5,000 employees) completely from the previous licensee in order to limit the reputational damage. The measure shows how seriously the Group took the crisis.
• Starbucks – Solidarity tweet with consequences: The coffee giant Starbucks was also caught between the fronts in the Middle East conflict. On October 9, 2023 – two days after the war began – the US union Starbucks Workers United published a post on X (Twitter) with the words “Solidarity with Palestine!” (Solidarity with Palestine). Although it was a union account, many observers saw this as the stance of the Starbucks brand – especially as the account used the company’s name and logo. Starbucks itself immediately distanced itself from the tweet and condemned hatred and terror against innocent people, but also emphasized sympathy for victims on both sides. However, the damage had already been done: Within a short time, Starbucks stores worldwide received over 1,000 complaints from outraged customers about the tweet. In the USA, pro-Israeli politicians such as Florida Senator Rick Scott called for a boycott of Starbucks. One member of parliament even declared on Twitter: “Anyone who goes to Starbucks now supports the killing of Jews”. At the same time, a wave of protest formed against Starbucks, as Palestinian activists accused the company of suppressing the union’s expression of opinion and being close to Israel. Sales plummeted in several Middle Eastern countries; Kuwait’s Alshaya Group, Starbucks franchisee for the MENA region, was forced to lay off around 2,000 employees in early 2024, citing “continued difficult trading conditions” as a result of the boycott calls. Starbucks still reported growth for Q4 2023, but fell short of analysts’ sales expectations(USD 9.43 billion instead of USD 9.6 billion) – also due to the activist boycotts, according to observers. The stock market value of Starbucks shares fell by around 9 % within a few weeks, wiping out around USD 11 billion in market capitalization. In the end, the company was even forced to take drastic action: Starbucks sued its own union for injunctive relief and trademark infringement for unauthorized use of the brand name in connection with the tweet. The union countered with a lawsuit against Starbucks, accusing the company of defamation and using the crisis for union-busting. This unique legal dispute between the company and employee representatives illustrates how much a single politically charged post can shake a company internally and externally.

Polarization of the public and boycott dynamics

The examples of McDonald’s and Starbucks show how public company statements can lead to polarization in a highly emotional political climate. Even well-intentioned gestures can be interpreted as partisanship and can attract opponents. In the case of McDonald’s, while many pro-Israeli voices applauded the solidarity with the soldiers, millions of pro-Palestinian customers around the world felt offended – resulting in global calls for a boycott. Starbucks, in turn, was caught between two stools by the Palestine tweet: both camps reacted indignantly – pro-Israeli circles boycotted the brand because of alleged Palestinian sympathies, while pro-Palestinian activists called for a boycott because Starbucks did not stand up clearly enough for Palestine or punished the union. The result is a toxic cocktail for companies: no matter what position is taken, a section of the public feels offended.

It is remarkable that these waves of outrage are no longer limited to one country. In the networked social media world, hashtags such as #BoycottMcDonalds or #BoycottStarbucks are spreading rapidly internationally. According to a survey, 60% of respondents in Turkey, for example, stated that they would no longer buy products from brands with links to Israel. Worldwide, companies such as McDonald’s, Starbucks, Coca-Cola and Zara have landed on the boycott lists of activist campaigns. A global BDS call(Boycott, Divestment and Sanctions) can now generate tangible economic pressure. The cancel culture dynamic functions here as a kind of informal corrective: from the activists’ point of view, companies are “held accountable” for morally wrong behavior – along the lines of consumers voting with their wallets. In fact, two thirds of young consumers in some countries agree with the statement that Cancel Culture holds companies accountable. Critics, on the other hand, complain that it creates a climate of intimidation that encourages exaggerated outrage and can also prematurely affect innocent people. One thing is certain: publicly visible brands can hardly avoid social debates without losing potential customers – silence is also punished by many. Corporate communication is therefore walking a fine line in times of conflict.

Concrete consequences of Cancel Culture for companies (examples):

• Loss of sales and value: boycott campaigns caused Starbucks’ stock market value to fall by almost 9.4 % (≈11 billion dollars) at times, while McDonald’s reported a “significant impact” on its global business.
• Store closures and restructuring: McDonald’s was forced to buy back its Israeli franchise after global protests in order to maintain brand integrity. Starbucks franchises in the Middle East have had to cut staff in hundreds of stores.
• Internal conflicts: Controversial positions can divide employees. At Starbucks, this led to an open legal dispute with the trade union over trademark rights and freedom of expression.
• Reputational damage: Companies run the risk of losing trust from both sides of the political spectrum. McDonald’s came under fire from Palestine supporters at the same time and had to painstakingly repair its reputation in the Middle East.

Legal framework conditions: Freedom of expression vs. corporate risk

From a legal perspective, companies and their owners are also allowed to express themselves politically in principle – freedom of expression under Article 5 (1) of the Basic Law protects “everyone” in Germany, i.e. all persons, and also applies to domestic legal entities (companies) via Article 19 (3) of the Basic Law. A CEO or entrepreneur therefore has the constitutional right to articulate their opinion on socio-political issues, and a company can also take a stand in the context of corporate communications. BUT: This fundamental right protects against state censorship or sanctions, not against criticism or market reactions from the public. In other words, calls for a boycott by outraged customers are themselves covered by freedom of expression as long as they do not slip into vilification or demonstrably false factual claims. The cancel culture debate is in a legally difficult area here, as canceling by consumers is not a legal sanction, but an expression of rejection by civil society.

Nevertheless, there are some legal implications and limits that entrepreneurs should bear in mind when positioning themselves politically:

• Competition and company law: Directors of listed companies have a duty to shareholders to act in the best interests of the company. A deliberate political statement that is likely to cause significant business disadvantages could – at least in theory – be interpreted as a breach of the duty of care. In practice, however, this is difficult to justify; courts grant management a wide margin of discretion (business judgment rule). Nevertheless, the Starbucks case shows that controversial communication can even influence the share price. In extreme cases, dissatisfied shareholders could exert pressure or demand a change of management if the brand positioning jeopardizes the company’s goals through political statements.
• Employment law and internal climate: If a company takes a clear political stance, this can have an impact on the employment relationship. Employees with differing convictions may feel discriminated against or under pressure, which in the worst case could lead to dismissals or labor law disputes. Conversely, companies must carefully consider how they deal with political statements made by employees. If an employer dismisses an employee because of a private political post, for example, the question arises as to whether this is justified by operational interests or whether the employee’s freedom of expression prevails. Political activity in the workplace is not a protected characteristic in Germany like religion or origin, but dismissals for expressing opinions outside of work can be disproportionate depending on the circumstances – another delicate balancing act.
• Limits to freedom of opinion: Of course, freedom of opinion ends where criminal laws come into play. Entrepreneurs should ensure that their statements do not slip into incitement to hatred, insult or defamation. In heated conflicts in particular, there is a risk of going too far in the choice of words. Slander or false statements of fact against groups of people can have legal consequences. Conversely, companies can take legal action against false accusations in a shitstorm. If activists spread false allegations about alleged company practices, for example, the company can take legal action for injunctive relief or criminal proceedings (e.g. against defamatory criticism). One example was provided by McDonald’s, which publicly expressed its “dismay at disinformation and inaccurate reports” after manipulated posters with allegedly cynical statements by the company appeared. This is where corporate personality rights come into play, which protect the reputation and social recognition of a company – analogous to the personality rights of a private individual.
• Trademark and liability issues: The Starbucks dispute revealed that even trademark rights can be affected if third parties (in this case the trade union) communicate politically using the company name. Companies should protect their brands accordingly and clearly regulate who speaks on behalf of the company. There is also the question of liability for consequential damages: a company cannot hold someone directly liable for a loss of sales due to a boycott – consumer behavior is free. However, if, for example, targeted misinformation or calls for illegal actions (e.g. damage to property, as in the Starbucks case of vandalized stores) are involved, those responsible could theoretically be liable. In practice, however, such lawsuits remain rare, as the burden of proof is high and the damage to the image of further escalation would often be greater.

Conclusion: balancing act between opinion and brand

For entrepreneurs and companies, public political positioning is a double-edged sword. On the one hand, today’s society increasingly demands authenticity and social responsibility – many customers expect “their” brand to take a stance on important issues. On the other hand, the reality of cancel culture shows that any statement inevitably generates headwinds. Brand positioning with a political edge thus becomes a balancing act: it can strengthen customer loyalty if it corresponds to the majority opinion of the target group, or trigger a shitstorm if it polarizes.

In purely legal terms, there is no “muzzle” law for business opinions – on the contrary, freedom of expression also applies to economic actors. However, legal sanctity does not protect against economic consequences. Pragmatism and communicative tact are required in the area of conflict between fundamental rights and business. Companies would do well to weigh up the following questions before making a socio-political statement: Does the statement fit in with our corporate values and the expectations of our core customer base? Is the issue so important that we will accept a loss of sales if necessary? How can we get our message across so that it is not misunderstood? And do we have a plan for dealing with a potential shitstorm – from PR crisis management to legal advice?

At the end of the day, it is clear that expressing an entrepreneur’s opinion publicly is no longer just a PR game, but involves real risks. Cancel culture is here to stay – as an expression of responsible consumers who measure brands by their values. This is both a challenge and an opportunity: those who remain authentic and communicate cleverly can even benefit from a clear edge. However, those who underestimate the explosive power of political issues risk being burned in the fire of outrage. For legal observers, this trend remains exciting: it calls for a sensitive balancing of freedom of expression, corporate interests and responsibility in an increasingly heated public sphere. Because one thing is certain: there is a fine line between taking a stance and damaging a stance – and every company has to sound it out for itself.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.