PALO ALTO, U.S. -- As deputy general counsel at Microsoft, Brad Smith was right in the thick of the computing giant's antitrust battle with the U.S. government in the 1990s and early 2000s.
In an interview with Nikkei last week, Smith, now president of the company, offered advice to other big tech businesses coming under similar scrutiny as public suspicion toward the industry rises.
"When you create technology that changes the world, you have to assume a responsibility for the world that you've helped to create," he said.
Concerns are growing that big tech companies have quashed competition to the detriment of users. The U.S. Justice Department filed an antitrust lawsuit against Google in October, and the Federal Trade Commission reportedly is preparing to sue Facebook after an antitrust investigation.
When asked about these cases, Smith said he "can't speak for" those companies. But he discussed lessons from Microsoft's yearslong legal fight with Washington.
Tech companies must come to terms with public scrutiny and "be prepared to change," Microsoft President Brad Smith told Nikkei. (Photo courtesy of Microsoft)
The Justice Department contended at the time that Microsoft illegally used the popularity of its Windows operating system to push the bundled Internet Explorer browser. Smith and the Microsoft team argued that the OS and browser were tied together as part of the same product.
The case ended in a settlement five years after the suit was filed in 1998, but the protracted court battle was among the reasons for Microsoft's belated arrival in the smartphone era. The final judgement, which included obligations for Microsoft meant to foster competitive conditions, expired in 2011.
"We studied the law, and we felt very good, that our practices were complying with the law," Smith told Nikkei. "But what we failed to appreciate was the possibility or even probability that the law itself would change to adapt to this new world."
In the U.S., for example, a debate is underway about whether to rework Section 230 of the Communications Decency Act, which limits tech companies' legal liability for content posted through their services, amid objections to how social media companies like Facebook and Twitter moderate content.
Technology is "fundamentally impacting every part of life," from "privacy and security to issues like broadband and skills and education," Smith said. "That's why I think it is now leading to so much more discussion, focus and even scrutiny of what technology companies are doing."
For tech businesses, he argued, "it's really important to understand the problems that people are worried about. I think one has to really understand how you're being perceived."
The concentration of data and wealth within a few giant companies has stoked distrust of big tech. People in Silicon Valley may insist to each other that they are making the world a better place, but many others do not hold the same view, fueling the push for litigation and regulation.
Smith likened this difference in perception to a mirror versus a photograph. When we look in the mirror, he said, "we see our best features. But ironically, when we look at a photograph of ourselves, most of us don't like it most of the time. Most of the world sees us the way we look on a photograph."
"I think you need to come to terms with that," he said. "And you need to be prepared to change."
Microsoft left its legal battle bruised, but avoided the worst-case scenario of a breakup. The company has not come under the microscope recently in the same way as peers like Google, Facebook or Amazon, as shown by its absence from a grilling of top tech executives by Congress this summer.
Yet it is not free of antitrust concerns. In July, Slack Technologies, a provider of chat software for businesses, filed a complaint against Microsoft in the European Union, alleging that the company's bundling of rival product Microsoft Teams with the widely used Office suite of business software was an anticompetitive abuse of its market power.
Slack agreed this month to be acquired by Salesforce, giving up on continuing as an independent company.
When asked whether this was a result of fair competition, Smith said he thinks so.
"I always ask when these questions arise whether there is something that we should be doing differently," he said. "But to date, we have not gotten that kind of feedback from regulators."
And the size of the Salesforce deal, at $27.7 billion, "speaks to Slack's success," Smith argued.
"I think that when most people look at the purchase that Salesforce made [this month], they're likely to conclude that was an awful lot of money," he said. "And it was probably a very wise purchase."
Smith addressed Microsoft's competition with Salesforce after the Slack acquisition.
"We compete with each other every day. But I actually think that's good for customers, and good for the world, and ultimately good for ourselves," Smith said. "I think most of us do our best work when we're competing with someone who keeps us on our toes, and Salesforce definitely does that for Microsoft."
