Satya Nadella, CEO, Microsoft Alex Wong/Getty Images
Microsoft CEO Satya Nadella speaking at the 2014 Microsoft Worldwide Partner Conference in Washington, DC.

Microsoft CEO Urges Tech to Focus on Self-Policing Not Regulation Fears

Tech giants need to work on transparency and protect privacy

Dina Bass, Emily Chang (Bloomberg) -- As technology giants face the threat of greater regulation worldwide, Microsoft Corp. Chief Executive Officer Satya Nadella says these companies should focus on greater self-policing to prevent the loss of personal privacy and other harmful side effects of innovations. 

“The most important thing for tech companies is not to worry about any impending regulation,” he said in an interview with Bloomberg Television following the release of his book “Hit Refresh.” “Long before even regulation, it's important for tech companies to “self-police” or build the tools that create transparency, make sure that people's privacy is protected.”

Alphabet Inc.’s Google, Facebook Inc. and Amazon.com Inc. – and to a lesser degree Microsoft – are facing increasing calls from both sides of the U.S. political spectrum for government action to curb their dominance.  Google was fined $2.7 billion by the European Union for abusing its search-engine dominance and European leaders last week warned Facebook, Google, Microsoft and others that they face fines unless they can rapidly remove terrorist content from the Internet. 

Besides better work on privacy, Nadella didn’t provide any other contemporary examples where tech companies should be more proactive in preventing the ill-effects of new technology. He did offer an older example – that of the invention of the wireless telegraph, which gave birth to wire fraud and made it imperative for the companies of the day to provide protections. He also said Microsoft’s business relies on making customers successful, and cautioned those who don’t will find their days numbered. 

“When I look at Microsoft's business model, one of the things that gives me both great pride as well as great confidence in the long-term success of our business is the surplus we create around us,” he said.

Nadella spoke forcefully in favor of Microsoft’s aggressive approach against the U.S. government to protect the immigration rights of its workers and the privacy of customer data. The company won a case against the U.S. Justice Department over whether it has to give overseas customer data to law enforcement, a case that the Supreme Court may now take up, and it threatened to take legal action on behalf of employees who are identified as Dreamers, a group of immigrants who were illegally brought to the U.S. as children.

Microsoft is “taking a principled stance, so that's how we pick these issues,” he said. “But at the same time, we're not elected officials. I don't have a mandate. So we're clear that, ultimately, we are subject to laws. But we will fight for what we believe is the right of our people.”  

Immigration, along with investment in U.S. infrastructure, are the issues Nadella said he raised in his two meetings with President Donald Trump and other tech CEOs. Nadella described Trump as “receptive to those ideas.”

“We need to keep working and make sure there is action on it.”

Nadella also said Microsoft, long focused solely on computer software, must keep making hardware  in certain categories, even though its devices retain a small share of the market and a sales shortfall this spring hurt overall financial results.  He cited the comment of legendary computer scientist Alan Kay, who pioneered many of the key concepts in the world of personal computing:  “It's Alan Kay who said ‘if you're serious about your software,  you make your own hardware.’ I think there's some truth to it,”  Nadella said. Without that, Nadella said, you can’t create new categories of devices, which is why Microsoft built it’s own HoloLens augmented reality goggles and the processors that run them.

He gave an example of a failure in this area from the Bill Gates and Steve Ballmer-era of Microsoft, when the company released tablet computers, long a pet-project of Gates. But Microsoft only made the version of Windows for them and left the rest to its computer-maker partners. They failed. The iPad came out several years later and became the market leader. 

But it’s not the iPad or the smartphone or Google Search that gives Nadella product envy. Asked which product he wishes Microsoft had developed first, he said the relational database, pioneered in the 1970s and still generating tens of billions of dollars in sales a year. A somewhat atypical response, but perhaps not for a man who once ran Microsoft’s server and database unit.

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