Critics are calling on the city of San Jose to divest from companies they say are enabling federal immigration enforcement. Officials, however, say that is easier said than done.
Efforts by Councilmembers Rosemary Kamei and Peter Ortiz to restrict new investments in Alphabet, Amazon and Microsoft over their contracts with immigration authorities failed to gain enough votes Tuesday, deadlocking 4-4.
Instead, a resolution was passed maintaining the status quo on the city’s investment policy, while directing staff to study how other California cities handle similar questions over adding ethical restrictions to investment policies.
Divestment has long been used as an economic tool to force political change — gaining widespread prominence in the 1980s, when universities and governments across the country cut ties with companies doing business in apartheid South Africa. The strategy has seen a resurgence as activists push institutions to cut financial ties with companies linked to Israel’s government amid the ongoing war in Gaza.
While no councilmembers disputed the need to push back against U.S. Immigration and Customs Enforcement, several argued that divesting, or even restricting future investments, could spell financial trouble for a city already facing a $56 million budget shortfall.
The three companies are on the list of the 10 most dominant in the modern American economy — part of a small group of stocks so large they account for roughly a third of the earnings generated by the country’s 500 biggest publicly traded companies, according to recent market data.
According to city staff, its holdings in Microsoft alone total about $8.3 million in bonds set to mature in February 2027. The memo did not say how much the city has invested in Alphabet or Amazon.
The amount of revenue the city generates from its investments is significant.
According to city staff, corporate bonds generated $22 million of the city’s $95.8 million in total investment earnings last fiscal year, out of an overall city budget of about $5.5 billion.
The core dispute was whether divesting would ultimately do more harm than good to already shrinking resources.
The city’s finance department warned that restricting investments in major corporations would severely limit the pool of companies the city can invest in, increasing concentration risk and likely reducing earnings used to fund city services.
Finance Director Maria Oberg also highlighted that tracking every investment’s ties to ICE would be “untenable.” And if the city’s corporate investment program is eliminated entirely, it could cost San Jose between $3 million and $5 million annually.
While staff identified a direct ICE contract with Microsoft worth about $600,000, it could not independently verify similar ties for Amazon or Alphabet, Google’s parent company — though a Kamei-Ortiz memo cited media reports linking both to immigration enforcement.
“We cannot say we stand with immigrants while continuing to invest public dollars in companies that benefit from their suffering,” Ortiz said. “Today’s vote is about holding companies accountable — when those choices involve profiting from terrorizing our residents, there should be consequences.”
Staff argued the city has a legal obligation to act in its financial best interest and that investment decisions should not be driven by political considerations.
At least 62 community members weighed in, with opinions split among those who wanted to restrict investments in companies with ICE contracts, those who wanted to extend restrictions to companies linked to Israel and those who opposed divestment altogether.
Ethan Pham, a nurse from San Jose, urged the council to pass what he called an “ethical investment policy.”
“San Jose is a sanctuary city, and we should reaffirm this by divesting and barring any further investments into companies such as Alphabet, Microsoft and Amazon who have contracts with ICE,” Pham said.
Several activists urged the council to extend restrictions to companies linked to Israel, but the proposal before the council was limited to ICE contracts.
Councilmember David Cohen said he agreed that ICE’s conduct was “reprehensible” and that the city should use every tool available to protect residents. However, questioned whether restricting investments was the right approach, noting the city would continue spending on contracts with the same companies regardless, including through its own use of Microsoft Office and Teams.
“It’s not clear to me that this is the vehicle to do that,” Cohen said.
Councilmember George Casey offered the sharpest rebuke of Ortiz and Kamei’s proposal, calling it an “unstructured directive” that lacked the rigor of sound policy.
“A sound policy requires clear definitions, objective criteria, consistent application rules and administrative feasibility — and this memo lacks all four,” Casey said. “The memo hinges on companies that have ‘ties to ICE,’ but never defines what qualifies as a tie, whether indirect relationships count, whether scale or materiality matters. Without definitions, this policy has no clear scope.”
Vice Mayor Pam Foley and Councilmember Bien Doan recused themselves due to personal investments in the companies.
Mayor Matt Mahan, who is running for governor, was absent during the vote.
“The council made a responsible decision on Tuesday — it’s critically important that we protect retiree’s pensions and healthcare,” said Mahan in an emailed statement. “Our long-term fiscal responsibilities require us to be clear-eyed about decisions that could negatively impact our general fund.”