And weapons the promise and the peril of the digital age. Im tom giles, in for emily chang. Joining me today on bloomberg studio 1. 0, brad smith, president of microsoft. Tom brad, thanks for being with us today. A lot of the last year has been spent talking about and spilling ink over this complex relationship between the u. S. And china. Id like to hear more about your concerns about the way this is playing out between the u. S. And china, and what impact that could have on u. S. Technological leadership on a global arena. Brad the u. S. Is the Digital Technology leader in the world today, but one of the important things for all of us to remember is that we dont actually invent or create technology by ourselves. If you buy an American Technology product, a product that is made by an american company, in all probability, it consists of inventions that came from Silicon Valley as well as bangalore and beijing and dublin and london, toronto and melbourne and the like. We need to continue that. If we were to try to construct a new digital iron curtain down the middle of the pacific, in all probability, we would hold ourselves back rather than hold someone else back. We need to keep that in mind. Tom what happens when there is theft of intellectual property . Brad we will in all probability have a new generation of Technology Export control rules in the United States. That is sensible, but they are going to need to work differently from the way they have worked in the past. In sensitive areas, technology that could have more important military uses, for example, you are still dealing with technology that may have important civilian uses as well. Socalled dual uses. We will need a Regulatory Regime that focuses on how the technology is being used, who the users are. Only by doing that can we protect National Security while promoting economic competitiveness. Tom part of your discussion focuses on the different ways u. S. Consumers and chinese consumers use technology, and you have some interesting and colorful examples. Brad it goes to the multifaceted nature of the u. S. Chinese technology relationship. On the one hand, there are frustrations American Companies have about a lack of market access, and i think those are legitimate frustrations, as we describe. But at the same time, we shouldnt overlook the fact that there are times when chinese consumers simply have different preferences. I think you can look at the challenges that a company like amazon or google has had in china, and part of it, at least, relates to formidable local competitors that moved in some ways in a different direction to meet the tastes of chinese users. Tom there is a lot of inwardlooking nationalism, the rise of populism, areas where leaders are playing on xenophobia. What gives you hope that, in an era like that, we can achieve the kinds of cooperation that are going to be needed to achieve these changes . Brad well, the thing that gives me hope, as we describe here, are the shoots coming out of the ground, the progress that we are making in certain areas. Cybersecurity is certainly one of them. You know, we have championed this as a company. We believe that we have to bring people together to protect the cybersecurity of countries around the world, to protect our democracies from cyberattacks. Tom i want to bring things a little bit closer to home. We are in an era where we are seeing increasing activism on the part of tech employees, who for many years, traditionally, not always, have really kind of gone along with the vision of the leaders and the entrepreneurs who got these companies off the ground. As tech gets bigger and becomes involved in more areas of the world and society, selling technology, for example, to governments and militaries, we are seeing the Tech Industry and employees of the Tech Industry really start to voice their concerns more vocally, and you have encountered it at microsoft as well. Brad what we found is the first thing we need to do is really engage with employees. We need to listen to them. We need to understand their concerns. One of the things we found is even when we conclude that a group of employees may not have the right answers, they are often asking the right questions. And if we sit down and actually push ourselves a little bit harder to understand their concerns and think about those questions, we are able to develop a principaled path. And i do think in the world today you need a principaled path. And so for example, we have said on an issue like selling technology to the u. S. Military, we believe that is important for us to do. We want the people who defend our country to know that we have their back, but we are also going to use our voice as a Corporate Citizen to address the new issues around Something Like the ethics and human rights implications of Artificial Intelligence and weapons. It is a journey. Its not something that is one and done in a month or a quarter, but i think it is part of a new relationship with employees, and a lot of good can come from a deeper relationship. Satya obviously brought the spirit of innovation and a real growth mindset to the part of the company and most especially our Product Development and our engineering. I think you see this renaissance of innovation. Tom you grew up in the midwest. Your father was an engineer at wisconsin bell. Your mother was a schoolteacher for a time. How did your upbringing influence the trajectory of your career and the choices you made that led to where you are now . Brad my parents, first of all, instilled in me an ethic that said dont go talk about yourself. Ask others about themselves. You are going to come away learning a lot more. And as we think about the issues that we face in the world of ask others about themselves. You are going to come away technology today, i think what we need to do is learn more and listen more, and sometimes maybe talk less. Tom you went to law school at columbia, undergrad at princeton where you met your wife. We are in a period where there is a lot of rethinking of the role of higher education, the cost for example. I would love to hear from you about the ways that your experience as an undergrad and in law school shaped your view of the world. Brad i had a wonderful opportunity to learn myself at places like princeton and columbia, where it really was how big and diverse the world is. It left me with a profound commitment to the importance of education beyond high school. We need to equip people with the fields of tomorrow, computer science, data science, a multidisciplinary approach to issues around the ethics of Artificial Intelligence. We need to create more opportunities for people to go back and add to their education, because thats what they are going to need on an ongoing basis as technology continues to change the economy and changes jobs. Tom one of your early jobs was at Covington Burling. I understand there was a condition that you wrote into your contract. Brad in hindsight, i look back at my own experience, and i both laugh at myself and am slightly amazed that i did what i did. There was one firm, law firm that i wanted to work at, i got the offer from that law firm, and then i turned around and said, thank you very much, but i wont come work with you at your firm unless you will give me a personal computer, and this was 1986. People looked at me a little bit quizzically. Why do you want a pc . We have secretaries that do these things. You know, i had a Software Program i loved. It was called microsoft word, version 1. 0. I said i can think better, i can write better, i can work faster if i can have that on my desk, and thankfully, the firms Management Committee, and it took the firms Management Committee to do it, said i could come work there and have my own pc. Tom i want to hear a little more about how you went from Covington Burling to microsoft. Brad i was a lawyer first in washington, and i was in the new London Office and spent four years there. There came a point in 1993 when david curtis, wonderful person, he was the chief International Counsel at microsoft, came to me and said we would like you to move from london to paris, and take a job at the company, and lead our European Legal and Corporate Affairs team. And i thought about it and went back, and i said, no thank you. He told me, you dont get it. Were not asking you to come to microsoft just to work on the things we are doing now. We want you to come to microsoft and help us identify the things that we are not doing, but we should and be in a position to help take us there. And i thought about it and went that is pretty cool. Thats what brought me to microsoft. That is what has kept me at microsoft for 26 years. Tom your role has evolved quite a bit from 1993, when you were in the legal department, to where you are now president. I think of your work alongside satya and amy hood, cfo, as a triumvirate. How do you three Work Together, and how has your role evolved . Brad it has been a fantastic time to be at the Company First of all. Satya became ceo in 2014. Amy had just become the cfo before that. Satya obviously brought the spirit of innovation and a real growth mindset to the entire part of the company and perhaps most especially our Product Development and our engineering. I think you see this renaissance of innovation. Part of what it takes to be a tech company in the world today, you have to navigate the world. Amy and i have offices just down the hall with carpet that is wellworn between us, and we sort of say amy worries about the macroeconomics of the world, and i worry about the geopolitics of the world, and then together with satya, we try to come together and make decisions quickly. Thats a key aspect of what it takes to be successful as a tech company, especially to innovate. You need to have people who are not just thinking broadly but can act decisively. That is certainly what we strive to do. Tom good leadership requires more than just, you know, a handful of people who can quickly come to decisions. You want healthy disagreement. Can you give me an example or an anecdote of where it wasnt easy to come to a consensus on a shift, a change, a policy decision . Brad first of all, i think your point is of fundamental importance. The issues of technology, of business, of the world are complicated. If everybody comes quickly to a single view, there is a really good chance that you are going to miss the nuances, and you are going to make a mistake. In short, almost every issue that we deal with has healthy discussion and debate, and that is fantastic. We had to decide in august of 2018 whether we were going to be more public in our concerns about cyberattacks on american politicians coming from russia. We decided that we would speak more clearly, and we did. But the thought process, the discussion process, it was not without really good, healthy debate. Whenever there is a new team in the white house, we have a new president of the United States, our philosophy is to partner where we can and stand apart when we should. Tom i want to look ahead to the future. Transitioning on that theme of immigration, thats one of the areas where microsofts values, and the ones you and satya and others have articulated, have put you at odds with the current occupant of the white house. Brad we really seek to provide a candid perspective on what we have gone through as a company on addressing issues like immigration. The first thing i would say is we have a philosophy, a set of principles that remains constant. Whenever there is a new team in the white house, we have a new president of the United States, our philosophy is to partner where we can and stand apart when we should. And we worked together with the Obama White House on many issues, and yet we sued the United States government, not once, but four times, over the surveillance and privacy issues that were surfacing in the wake of the snowden disclosures. Weve had the opportunity to work with President Trump and the Trump White House on important initiatives around issues like cybersecurity. And at the same time we have brought a lawsuit, together with Princeton University and a princeton student to address the issues that are facing the dreamers. We have employees that benefit from the daca legislation whose ability to stay in the United States is impacted by the executive order that changed that. But i will say the other thing that we really seek to do, regardless of who is in government in this country or in any other, is to focus on the issues, address the substance, be respectful of people, and not engage in some of the more dramatic namecalling that i think can take us backward rather than move us forward. I think especially as a company, we need to be a force for constructive dialogue and progress. And you know, that is the kind of philosophical tenet around which we just remain steadfast. Tom we are on the cusp of another election. As you look at the field of candidates for 2020, are there any who are articulating what you believe to be a sensible way forward for the Technology Industry . Brad one of the reasons we wrote this book is we in fact believe there is an opportunity not just for people who are running for office, but for all of us as citizens to actually think a bit more broadly and deeply about the Technology Issues of our time. I think theres a lot of room for us to be broad in our perspective. Technology is changing the world, but it is not reaching everyone in this country. Rural communities are being held back by the lack of access to broadband. Many populations, minority populations, people who are less well off, are being held back by the lack of access to technology skills. We all have fundamental interest in the protection of our privacy and security and the like. So what we would say is, we would all benefit from understanding where technology is going, and then thinking about what that means for our lives, and what we will need from the leaders of our states and this country. Its really an effort to make these issues more approachable, to also hopefully make them a little more interesting and engaging, that really sort of motivated us to take the time to put this book together. Tom is there a candidate who is outlining a, what you consider to be a sensible view on the right way to regulate technology . Brad well, im not going to endorse any specific candidate. I will say that in every candidate we see some ideas that we think have real merit, and in every candidate we see an opportunity to learn more and do better. If there is one issue that i will point to where i would frankly just love to see more attention and more innovation, it is in this issue around rural broadband. We live, every day in this country now, with an appreciation that there are people in Rural Communities that feel the country is not serving their needs. And yet, what we too often see is candidates who talk about spending 80 million or 70 or 80 billion or more to try to bring fiberoptic cables to every home. There are better ways, there are cheaper ways, there are faster ways for us to connect everyone in this country. We need to make it a goal, we need to ground ourselves in the data. We need a more forwardlooking strategy. I hope that we will see one or more candidates embrace this, because it deserves to be a real mission, we believe, for the United States. Tom microsoft was a real trailblazer, even if it didnt want to be, in terms of you know navigating a u. S. Government that really tried to break up what it saw as a monopoly or monopolistic tendencies. We are on the cusp of, or the early stages, i would argue, of another big wave of regulatory scrutiny and crackdown on the Technology Industry. What are the takeaways from your experience in the antitrust battle with the u. S. Government that you think are relevant to the facebooks and googles of the world who find themselves on the receiving end of a great deal of government ire right now . Brad it is so important to understand the concerns that people have, the problems that they want to see solved. It is so easy in the world of technology to be so excited about yourself and your own products that you can sort of lose touch with the concerns that others may have about you. And we learned in some ways the hard way about the importance of getting out and listening and connecting and then working to solve problems, but i think we also learned that nobody ever dies of humility. If you can move forward with the spirit of listening, you can then address the issues, whether it is privacy or you know, security or something else. But it all starts with a willingness to step back and look anew and even look at yourself with a little more perspective than you had before. Tom youve spent more than two decades at microsoft. You have really helped shape and usher in a new era of engagement with the government, and as bill gates talks about in his introduction, what is left to do there for you . Brad there is always more work to do. The first thing i would say is i have been enormously fortunate to work on very important issues with a number of great people and do it as part of a great team. But lets just think about the issues that matter to the future. When i started working at microsoft 26 years ago, technology was still a niche. Today it is ubiquitous. I think what the world needs is Tech Companies and people in government who can Work Together to solve the problems that are going to define our generation of people. We are on the cusp of bringing to life machines with Artificial Intelligence that, for the first time in human history, will have the capability to make decisions that previously were only made by people. As a generation, we better get that right, because if we fail, every generation that follows is going to pay the price for our shortcomings. So every day, i actually get up with not only the opportunity to work with what i regard as some of the most wonderful people you can find anywhere, but an opportunity to contribute to some of the greatest challenges of our time. And i have a lot of work, i hope, i can continue to do. Tom there is a lot of work that needs to be done at other companies right now though. We have talked about facebook. Alex stamos, formerly of facebook, has said you should be ceo of facebook. Does that not appeal, a challenge like that . Brad i am working at the right company, in the right job, for the person i would rather work for than anybody in this industry, satya nadella. There is no other place i would want to be. I dont want to take anything away from anybody else or any other company, but i am exactly where i want to be. Tom government, the idea of working in the government where you could push for the enactment of the policies that you outlined in your book, that doesnt appeal . Brad no, for a very particular reason. One of the things that we get to do is work with governments around the world on a sustained basis. One of the things i have learned from my years at microsoft is if you actually want to have an impact, and you want to measure yourself, not by your title or your job, but what you actually contribute to and help accomplish, youve got to be prepared to take something on and stick with it. Youve got to have a longterm vision, and thats what we are working to do at microsoft, where we think about these issues of trust, and security, and privacy, and the like. I feel that i am at a place, and its not just me, obviously, but a group of people is able to contribute in a very particular and constructive way. Thats what i want to keep doing. Tom brad smith, microsoft president , thank you so much for joining us today on bloomberg studio 1. 0. Brad thank you. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Alix saudi aramco for sale at what price . The oil giant kicks off its ipo, making concessions on dividends. 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