Hi all,
A few notes from my own perspective:
1) I'm glad to see this lively debate! I hope the right solution comes out of it and is iron-clad against contingencies, insofar as possible :)
2) I don't want to see the projects used and misused as a platform to achieve goals other than our mission of sharing free knowledge -- and, as a part of that, I want to discourage contributions to articles that have an end goal other than making those articles better according to objective standards (and, of course, encourage contributions that do have the end goal of making articles better). Though I haven't checked with legal, I don't think that's a controversial statement :)
*How* we discourage contributions that don't fit with our own goals is the question -- policy changes Wikimedia-wide, project-wide, something else? This is a proposal using one of the legal tools in our toolbox, the ToU, which is one of the very few Wikimedia-wide policies that can address contribution standards and is also one of the very few tools that is recognized as legally valid by outside parties (unlike for instance our internal policies like NPOV, which are just that, editorial policies).
3) I think this proposal is trying to addressing a long-standing issue of COI editing. That issue was recently brought to the forefront again by the actions of a few companies, but it's been an issue for a long while.
4) I'm glad to see Dominic weigh in with some issues from a GLAM perspective. Of course I personally am interested in GLAM issues, but I also think we collectively need to grapple with how to make the projects friendlier towards all kinds of people with things to share, including but not exclusively GLAMs and educators.
For my part, I would love to see a world where contributing to Wikipedia was seen as a normal part of business for educational and cultural institutions and the people who work there; I think that would be a win for all of us, including the GLAMS. How to do that so we also preserve our neutrality and values is the challenge facing us right now: and we need to figure out specific things, like how we balance disclosure versus anonymity for these contributors, and how we distinguish good motivations from cluelessness or COI. I don't have a good answer for this personally, though I have lots of thoughts (I've worked with plenty of researchers who are in fact trying to work on Wikipedia during their paid time. And bear in mind that for academics like professors, there's often no real line between "on the clock" and "off the clock" -- you do work relating to your job all the time).
Disclosure: I myself contribute hours and hours of work to Wikimedia during my day job, including writing this email, because I've made the case to my employer that my contributions to WMF as a trustee and volunteer can be seen as a professional obligation, just like helping out with a library association would be. That does not include my actual editing of Wikipedia, which I do with my volunteer hat on and in my free time. But let's face it: the lines are often blurry. For instance, I don't think my edits to engineering articles are a COI simply because I also work as an engineering librarian. But I do recognize that there are lots of different cases, ranging from that kind of mild overlap of day-job interest and Wikipedia work; to a researcher making an edit on a subject they study and (unknowingly or knowingly) over-representing their own work in the references; to someone making an edit to a company article to make it more favorable because they were paid by the company to do so. So, having clarity when we talk about these issues about what kind of cases we have in mind is important.
best, -- Phoebe