This is de facto already somewhat the case - most index funds lend out their shares to earn some additional income, and so they can't vote those shares. Howeve

This is de facto already somewhat the case - most index funds lend out their shares to earn some additional income, and so they can't vote those shares. However, this becomes a bigger issue as index funds gain additional scale. As shares owned by index funds further surpasses the number of shares demanded for borrowing, index funds will be left with more shares to vote. This will likely reduce shorting costs and increase total shares sold short somewhat, but likely not enough to compensate for the additional index fund ownership (i.e., index funds will net still have more shares for voting).