0:00

Hi,

0:10

everyone, I'm Tom Giles in for Emily Chang,

0:13

and this is Bloomberg Studio one point

0:15

Oh. As the executive editor

0:17

of the Global Technology Team at Bloomberg

0:19

News, I helped lead a team of sixty

0:21

reporters working around the world on stories

0:24

that range from we Works Remarkable

0:26

Rise and It's traumatic fall from Grace

0:29

to Facebook's ongoing and I Trust

0:31

Probes. I was excited to

0:33

fill in the anchor seat for this episode because

0:35

I've covered Microsoft for many years

0:38

and I've seen it really evolve in

0:40

terms of its ability to change

0:43

the technology landscape and

0:45

its impact on the world. Really Having

0:50

spent twenty six years of his career

0:52

working at Microsoft alongside Bill

0:54

Gates, Steve Ballmer and now Sati

0:56

Adela, Brad Smith has

0:58

had a front row seat to some of the company's

1:00

biggest milestones. He's

1:02

now focused on spreading the message beyond

1:05

Microsoft's campus with the new book

1:07

Tools and Weapons The Promise

1:09

in the Peril of the Digital Age. Joining

1:12

me today on Bloomberg Studio one point

1:14

Oh, Brad Smith, President

1:17

of Microsoft. Brad,

1:29

thanks for being with us today. A lot

1:31

of the last year has been spent talking

1:33

about and spilling ink over

1:36

this complex relationship between the

1:38

U S and China. I'd like to hear more

1:40

about your concerns about

1:42

the way this is playing out between the US

1:44

and China and what impact that could

1:47

have on US technological leadership

1:49

on a global arena. The US

1:52

is the digital technology leader

1:54

in the world today, but I think one of the important

1:56

things for all of us to remember is

1:58

that we don't actually in or create

2:00

technology by ourselves. If

2:03

you buy an American technology product,

2:05

a product that is made

2:08

by an American company, in all

2:10

probability, it consists of inventions

2:12

that came from Silicon Valley as

2:14

well as Bangalore and Beijing, in

2:17

Dublin and London, Toronto and Melbourne

2:19

and the like. UM. We

2:21

need to continue that if

2:24

we were to try to construct a new digital

2:26

iron curtain down the middle of the Pacific,

2:29

in all probability, we would hold

2:31

ourselves back rather than

2:33

hold someone else back. We need to

2:35

keep that in mind. What happens when

2:38

there's theft of intellectual

2:40

property. We will, in all

2:42

probability have a new generation of

2:45

technology export control rules in

2:47

the United States. That's sensible,

2:49

um, but they're going to need to work differently

2:52

from the way they've worked in the past in

2:54

sensitive areas technology that could

2:57

have more important military uses.

2:59

For example, you're still dealing

3:01

with technology that may have important civilian

3:04

uses as well, so called dual uses. Um,

3:06

we'll need a regulatory regime that focuses

3:09

on how the technology is being

3:11

used, who the users are. Only

3:14

by doing that can we protect national

3:16

security while promoting economic

3:19

competitiveness. Part of your discussion

3:21

focuses on the different ways

3:24

US consumers and Chinese consumers

3:26

use technology, and you have some interesting

3:29

and colorful examples. It goes to the

3:31

multifaceted nature of the US

3:33

Chinese technology relationship.

3:36

On the one hand, there are frustrations

3:38

that American companies have about a lack of

3:40

market access, and I think those are legitimate

3:43

frustrations as we describe. But

3:45

at the same time, we shouldn't overlook the fact

3:48

that there are times when Chinese consumers

3:50

simply have different preferences that I think

3:52

you can look at the challenges that

3:54

a company like Amazon or a company

3:56

like Google has had in China, and

3:59

a part of it at least relates

4:02

to formidable local competitors

4:05

that moved in some ways in a different direction

4:07

to meet the taste of Chinese users. There's

4:10

a lot of inward looking nationalism, arise

4:12

of populism, um, you

4:14

know, areas where leaders are playing

4:16

on xenophobia. What gives

4:18

you hope that in

4:20

an era like that, we can achieve the

4:22

kinds of cooperation that are

4:25

going to be needed to achieve

4:27

these changes. Well, the thing that gives

4:29

me hope, as we describe here, are

4:31

the shoots coming out of

4:33

the ground. The progress that we're making

4:35

in certain areas. Cybersecurity

4:38

is certainly one of them.

4:40

Um. You know, we've championed this as

4:42

a company. We believe that

4:44

we have to bring people together to

4:47

protect the cybersecurity of

4:49

countries around the world, to protect our democracies

4:52

from cyber attacks. I want to bring

4:54

things a little bit closer to home. We're

4:56

in an era where we're seeing increasing activism

4:59

on the part of tech employees

5:01

who, for many years traditionally

5:04

not always have really

5:06

kind of gone along with the vision of the leaders

5:09

and the entrepreneurs who've got these companies

5:11

off the ground. As tech

5:13

gets bigger and becomes involved in

5:15

more areas of the world

5:18

and society, selling technology,

5:21

for example, to governments and militaries,

5:24

we're seeing the tech industry and employees

5:26

of the tech industry really start

5:28

to voice their concerns

5:31

more vocally, and you've encountered

5:33

it at Microsoft as well.

5:35

What we found is the first thing we

5:37

need to do is really engage with employees.

5:40

We need to listen to them, we need to understand

5:42

their concerns. One of the

5:44

things we've found is even when we conclude

5:47

that a group of employees may not have the right

5:49

answers, they're often asking

5:51

the right questions. And

5:53

if we sit down and actually push ourselves

5:56

a little bit harder to understand

5:58

the concerns and think about those questions,

6:01

were able to develop a principal

6:03

path. And I do think in the world today you need

6:05

a principal path. And

6:08

so for example, we've said on an issue

6:10

like selling technology to the US military,

6:14

we believe that's important for us to do.

6:16

We want the people who defend our country

6:19

to know that we have their back. But

6:21

we're also going to use our voice as a corporate

6:23

citizen to address the new issues

6:25

around something like the ethics

6:27

and human rights implications of artificial

6:30

intelligence and weapons. It

6:32

is a journey. It is not something that is

6:35

one and done in a month or a quarter um.

6:38

But I think it's part of a new relationship with

6:40

employees, and a lot of good can come from

6:42

a deeper relationship. You're

6:49

listening to my conversation with Brad Smith,

6:51

president of Microsoft up Next.

6:53

Brad's take on working alongside CEO

6:55

Sachi Adela and cfo Amy Hood

6:58

and how the leadership team has evolved

7:00

over the years. I'm Tom Giles,

7:03

and this is Bloomberg Studio one point.

7:05

Oh.

7:28

You grew up in the Midwest. Your

7:30

father was an engineer at Wisconsin

7:32

Bell, your mother was a school teacher for a time.

7:35

How did your upbringing influence

7:38

the trajectory of your career

7:40

and the choices that you made that led you to where

7:42

you are now. My parents, first of all, installed

7:45

in me uh an

7:47

ethic that said, don't go talk about yourself,

7:50

ask other people about themselves. You're

7:52

gonna come away learning a lot more. And

7:55

as we think about the issues that we

7:57

face in the world of technology today,

8:00

I think what we need to do is learn

8:02

more and listen more and

8:05

sometimes maybe talk less. You went

8:07

to law school at Columbia, undergrad

8:09

at Princeton, where you met your wife. We're

8:12

in a period where there's a

8:15

lot of rethinking of the role

8:17

of higher education the cost.

8:19

For example, I would love

8:21

to hear from you about the ways

8:24

that your experience as an undergrad

8:26

and in law school shaped

8:29

your view of the world.

8:31

I had a

8:33

wonderful opportunity to learn

8:36

myself at places like like Princeton

8:38

and Columbia. Was

8:41

was really how big and diverse the world is.

8:43

It left me with

8:45

a profound commitment to the importance

8:48

of education beyond high school.

8:50

We need to equip people with the

8:52

fields of tomorrow, computer science,

8:54

data science, a multidisciplinary

8:57

approach to issues around the ethics of

8:59

our official intelligence. We

9:01

need to create more opportunities for

9:04

people to go back and add to their education,

9:07

because that's what they're going to need on an ongoing

9:09

basis as technology continues

9:11

to change the economy and change his jobs.

9:14

One of your early jobs was at Covington

9:16

Burling. Understand you had there was a condition

9:18

that you wrote into your your contract

9:21

there. In hindsight, I look

9:23

back at my own experience and I both

9:25

laugh at myself and sort of am

9:27

slightly amazed that I did what I did because

9:30

I there was one firm, law firm

9:32

that I wanted to work at Covington and

9:34

Burling. I got the offer from that law firm,

9:36

and then I turned around and said, thank you very

9:38

much, but I won't come work with you and at

9:41

your firm unless you will give me a personal computer.

9:44

And you know this was six

9:47

people looked at me a little bit quizzically. You know,

9:49

why do you want to PC? We have secretaries

9:51

that do these things. And I

9:55

had a software program I loved. It was

9:57

called Microsoft word for from

10:00

one point oh, And I said, you know what, I can think

10:02

better, I can write better, I can work faster

10:05

if I can have that on my desk.

10:07

And thankfully at the firm's

10:10

management committee, and it took the firm's management

10:12

committee to do it, I said I

10:14

could come work there and have my own PC. I

10:17

want to hear a little bit more about how you went

10:19

from Covington and Burling to Microsoft.

10:22

Well, as I got to Covington, I

10:24

was a lawyer. I was first in Washington, and I

10:26

was in the firm's new London office. I spent

10:29

four years there. And so there came a point

10:31

in when David

10:33

Curtis, wonderful person,

10:37

uh he was the chief International Council

10:39

at Microsoft, came to me and said, you know, we'd like you

10:41

to move from London to Paris,

10:43

UH and take a job at the company and lead

10:45

our European legal in corporate affairs

10:48

team. And I thought about it, and I went back

10:50

and I said, no, thank you, And

10:52

he told me you don't get it. We're

10:55

not asking you to come to Microsoft just

10:57

to work on the things we're doing now. We

11:00

want you to come to Microsoft and

11:03

help us identify the things that we're not

11:05

doing what we should and

11:07

be in a position to help take us there.

11:10

And I thought about, what, Oh, that's pretty

11:12

cool. That's what brought me to Microsoft.

11:15

That's what has kept me at Microsoft for twenty

11:17

six years. Your role has

11:19

evolved quite a bit from when

11:23

you were in the legal department UM

11:25

to where you're now president. I think

11:27

of your work alongside Sacha and

11:29

Amy hood CFO is something

11:32

of a triumvirate um. How

11:34

do you three work together and how has your role

11:36

evolved? Well, you know, it's been

11:39

fantastic time to be at the company,

11:41

first of all, UH, And

11:44

yeah, Satia became the CEO

11:46

in Amy had just become

11:48

the CFO before that. UH.

11:51

And you know, Satia obviously brought

11:54

this spirit of innovation UH

11:56

and a real growth mindset to you

11:58

know, the entire part of the company and perhaps

12:00

most especially our product development

12:02

and our engineering. And I think you see this renaissance

12:05

of innovation. Um. But part

12:07

of what it takes to be a tech company in the world

12:09

today is you have to navigate the world. Uh.

12:13

Amy and I have offices just down

12:16

the hall with carpet that

12:18

is well worn between us, and yeah,

12:20

we sort of say, Amy worries about the macro

12:23

economics of the world, and I worry about the

12:25

geopolitics of the world. And then together

12:27

with Satia, we really try to

12:29

come together and make decisions quickly.

12:32

And I think that's actually another key

12:34

aspect of what it takes to be successful

12:37

as a tech company, especially to innovate.

12:40

You need to have people who are not just thinking

12:42

broadly, but can act decisively.

12:44

And that's certainly what we strive to do. Good

12:47

leadership requires more

12:49

than just you know, a handful of people

12:51

who can quickly come to decisions.

12:54

You want healthy disagreement. Can

12:56

you give me an example or an anecdote

12:58

of where there it

13:00

wasn't easy to come to a consensus

13:03

on a shift, to change a policy

13:05

decision. Well, first of all, I think

13:07

your point is of fundamental importance. Uh.

13:10

The issues of technology

13:13

of business of the world are

13:15

complicated, and if everybody comes

13:18

quickly to a single view, there's

13:20

a really good chance that you're going to miss

13:22

the nuances and you're going to

13:24

make a mistake. In short, almost every

13:27

issue that we deal with has healthy

13:29

discussion and debate, and that's fantastic.

13:32

We had to decide in

13:34

August whether

13:37

we were going to be more public in

13:39

our concerns about cyber

13:41

attacks on American politicians

13:44

coming from Russia, and

13:46

we decided that we would speak

13:49

more clearly. UH, and we did,

13:51

But the thought process, the discussion process,

13:54

it was not without really

13:57

good, healthy debate. This

14:04

is my conversation with Microsoft president

14:06

Brad Smith. Coming up, we

14:08

shine a light on how the company navigates

14:10

regulatory challenges and White House

14:12

policies that range from immigration to

14:15

privacy. I'm Tom Giles, this

14:17

is Bloomberg Studio. One point, Oh, stay

14:20

with us. I

14:43

want to look ahead to the future transitioning

14:46

on that theme of immigration. That's one of

14:48

these areas where Microsoft's

14:50

values and the ones that you and Sacha

14:52

and others have articulated have put

14:55

you at odds with the current occupant

14:58

of the White House. Were only seek

15:00

to provide a candid perspective

15:03

on what we've thought about and gone through as a

15:05

company and addressing issues like immigration.

15:07

The first thing I would say is we have a

15:10

philosophy, a set of principles

15:13

that remains constant, uh

15:16

whenever there is a

15:18

new team in the White House, we have a new president

15:20

of the United States. Our

15:23

philosophy is to partner where we can

15:25

and stand apart when we should.

15:28

And we work together with the Obama

15:30

White House on many issues. And yet we sued

15:34

the United States government not once, but four

15:36

times over the surveillance

15:38

and privacy issues that were surfacing

15:41

in the wake of the Snowden disclosures.

15:44

UM, We've had the opportunity to work with

15:46

President Trump and the Trump White House on

15:48

important initiatives around issues

15:50

like cybersecurity. And at the same

15:52

time, we have brought a lawsuit

15:55

together with Princeton University and a Princeton

15:57

student UH to a

16:00

rest the issues that are facing

16:02

the Dreamers. We have

16:04

employees that benefit

16:07

from the DOCCA legislation whose

16:09

ability to stay in the United States is

16:12

impacted by the executive

16:15

order to change that. But I will say

16:17

the other thing that we really seek to do, regardless

16:19

of who is in government in

16:21

this country or in any other, is

16:24

to focus on the issues, address

16:27

the substance, be respectful

16:29

of people, and

16:31

not engage in, you know, some

16:34

of the more dramatic name calling

16:36

that I think can take us backwards rather than

16:38

move us forward. I think, especially as a company,

16:41

we need to be a force for constructive

16:44

dialogue and progress. Uh.

16:46

And you know that is the kind of philosophical

16:49

tenet around which were just

16:51

remains steadfast. We're on the cusp

16:53

of another election. As you

16:56

look at the field of candidates

16:58

for are there

17:00

any who are articulating what you

17:02

believe to be a sensible way

17:05

forward for the technology

17:07

industry. Well, one of the reasons we wrote

17:09

this book as we in fact believe there's an

17:11

opportunity not just for people

17:14

who are running for office, but for all of

17:16

us as citizens to actually

17:18

think a bit more broadly and deeply about the technology

17:20

issues of our time. And

17:23

yeah, I think that there's a

17:25

lot of room for us two

17:28

be broader in our perspective.

17:31

Technology is changing the world, but it

17:33

is not reaching everyone in this country.

17:36

Rural communities are being held back by

17:38

the lack of access to broadband. Many

17:41

populations, minority

17:44

populations, people who are less well

17:46

off are being held back by

17:48

the lack of access to technology skills.

17:51

We all have fundamental

17:53

interests in the protection of our privacy

17:55

and security and the like. Uh,

17:58

And so what we would say as we

18:00

would all benefit from understanding

18:03

where technology is going and

18:05

then thinking about what that means for our

18:07

lives and what we will what we will need

18:10

from the leaders of our states

18:12

in this country. And it's really an

18:14

effort to make these issues more approachable,

18:17

to also hopefully make them a little more interesting

18:19

and engaging. That really

18:21

sort of motivated us to

18:24

take the time to put

18:26

this book together. Is there a

18:28

candidate who's outlining a what

18:31

you consider to be a sensible view

18:34

on the right way to regulate

18:36

technology web? I'm not going to endorse

18:39

any you know, specific candidate. I

18:41

will say that in every candidate

18:44

we see some ideas that we think have real

18:46

merit, and in every

18:48

candidate we see an opportunity

18:51

to learn more and do better. If

18:53

there's one issue that I'll point to where I would

18:55

frankly just love to see more

18:58

attention and more

19:00

innovation, UH,

19:02

it is in this issue around rural broadband

19:05

UM. We live every day in this country

19:07

now with an appreciation that there are people

19:10

in rural communities that feel

19:12

that the country is not serving their needs.

19:15

And yet what we too

19:17

often see I fear is

19:19

candidates who talk about spending you know,

19:21

sixty or seventy or eighty billion

19:23

dollars or more to try to bring fiber optic

19:26

cables to every home. There

19:29

are better ways, there are cheaper ways,

19:31

there are faster ways for us to connect

19:34

everyone in this country. We need to

19:36

make it a goal. We need to ground

19:38

ourselves in the data. We need to have a more

19:40

forward looking strategy. I hope

19:42

that we'll see one or more candidates

19:44

embrace this because it deserves

19:46

to be a real mission. We believe for the

19:49

United States, Microsoft was a real

19:51

trailblazer, even if it didn't want

19:53

to be in terms of, uh,

19:55

you know, navigating a US

19:58

government that really

20:00

try to break up what it saw as

20:02

a monopoly or monopolistic tendencies.

20:05

We're on the cusp of we're at the early

20:08

stages, I would argue, of another

20:10

big wave of regulatory

20:12

scrutiny and crackdown on the technology

20:15

industry. What are the takeaways

20:17

from your experience in the

20:19

antitrust battle

20:22

with the U. S Government that you

20:24

think are relevant to the

20:26

facebooks and Google's of the world who find

20:28

themselves on the on the receiving

20:30

end of of of a great deal of government

20:33

I are right now. It's so important

20:35

to understand the concerns

20:38

that people have, the problems

20:41

that they want to see solved.

20:44

Um. It's so easy in the world of technology

20:46

to be so excited about yourself and

20:49

your own products that you can sort

20:51

of lose touch with the

20:54

concerns that others may have about

20:56

you. And I we

20:59

learned, and some ways the hard way,

21:02

about the importance of getting out and listening

21:04

and connecting and then working to solve

21:07

problems. But I think we

21:10

also learned that nobody ever dies

21:12

of humility. If you

21:14

can move forward with the spirit of listening,

21:17

you can then address the issues,

21:19

whether it's privacy or you know, security

21:21

or something else. Um. But

21:24

it all starts with a willingness to

21:26

step back and look a new and

21:29

even look at yourself with a little more

21:31

perspective than you had before. You've

21:34

spent more than two decades of Microsoft,

21:38

You've really helped shape and usher

21:40

in a new era of engagement

21:43

with the government, and as Bill Gates

21:45

talks about in his introduction, what's

21:47

left to do there? Well, for

21:50

you, there is always

21:53

more work to do. The

21:55

first thing I would say is I've been enormously

21:59

fortunate to work on very important

22:01

issues with a number of great people and

22:03

do it as part of a great team.

22:05

But let's just think about the issues that matter

22:07

to the future. When I started

22:10

working at Microsoft twenty six years

22:12

ago, technology was still a niche.

22:14

Today it's ubiquitous. I

22:17

think what the world needs is

22:19

tech companies and people in government

22:22

who can work together to

22:24

solve the problems that are going to define

22:27

our generation of people. We

22:30

are on the cusp of bringing

22:32

to life machines with artificial

22:34

intelligence that, for the first time in human

22:37

history, will have the capability

22:39

to make decisions that previously

22:41

were only made by people. As

22:44

a generation, we better get that right,

22:46

because if we fail, every generation

22:48

that follows is going to pay the price

22:50

for our shortcomings. So every

22:53

day I actually get

22:56

up with not only the opportunity

22:58

to work with what I regard as some of them wonderful

23:00

people you can find anywhere, but

23:02

an opportunity to contribute to some

23:04

of the greatest challenges of our time,

23:07

and I have a lot of work

23:09

I hope I can continue

23:11

to do. There's a lot of work that needs

23:14

to be done at other companies right now. Though

23:17

we've talked about Facebook, Alex Stamos,

23:19

formerly of Facebook, has said you should

23:21

be CEO of of Facebook now

23:24

would be a good time for somebody like you. Does

23:26

that not appeal a challenge like

23:28

that? I am working

23:30

at the right company, in the right

23:33

job, for the

23:35

person who I would rather work for than

23:37

anybody in this industry.

23:39

Satya Nadella Um,

23:41

There's no other place I would want to be. I

23:43

don't want to take anything away from anybody

23:46

else or any other company, but

23:48

I am exactly where I want to

23:50

be. Government. The idea of working

23:52

in the government, where you could where

23:54

you could push for the enactment

23:56

of of of the policies that you outline

23:59

in your book, that doesn't appeal

24:02

no. For a very particular reason.

24:05

One of the things that we get

24:07

to do is work with governments around

24:09

the world on a sustained basis.

24:12

One of the things I've learned from my years

24:15

at Microsoft is if you actually

24:17

want to have an impact and you want to measure

24:19

yourself, not by your title or your job,

24:21

but what you actually contribute to and help accomplish.

24:24

You've got to be prepared to take something on and

24:27

stick with it. You've got

24:29

to have a long term vision,

24:31

and that's what we're working to do

24:34

at Microsoft, where we think about

24:36

these issues of trust and security and

24:38

privacy and the like. So I

24:40

feel that I'm at a place where it's

24:42

not just me, obviously, but a group of

24:44

people is able to contribute

24:47

in a very particular and constructive

24:49

way. And that's what I want to keep doing.

24:52

Brad Smith, Microsoft President,

24:54

thank you so much for joining us today on Bloomberg

24:57

Studio One point Oh. Thank you.

25:05

Bloomberg Studio one point Oh is

25:07

produced and edited by Kevin Hines.

25:09

Our executive producer is Candy Chang.

25:12

Our managing editor is Daniel Culbertson.

25:14

I'm Tom Giles, Bloomberg News Executive

25:17

Editor. This is Bloomberg