Microsoft’s Brad Smith on digital resilience during geopolitical volatility

Summary

In this enlightening discourse at Atlantic Council's AC Front Page event, Microsoft President and Vice Chair Brad Smith emphasizes the crucial role of digital resilience amidst geopolitical instability. He delves into Microsoft's strategic commitments to enhancing digital infrastructure in Europe, ensuring privacy and cyber security, and fostering AI-driven economic competitiveness. As the world navigates complex geopolitical dynamics, Smith underscores the necessity for trust, legal commitments, and collaborative growth to maintain transatlantic technology leadership.

Highlights

• Brad Smith announces Microsoft's expansion of European data centers to support a broad AI and cloud ecosystem. 📈
• Microsoft's pledge to legal action in defense of European digital operations underlines a strong commitment to regional resilience. ⚖️
• Smith underscores the importance of a European-managed cloud infrastructure to ensure compliance and local governance. 🌐
• The speech highlights ongoing support for European cybersecurity initiatives, including collaboration against cyber threats. 💪
• Smith reiterates Microsoft's dedication to respecting European laws, fostering trust and cooperation. 🤝

Key Takeaways

• Microsoft is committed to expanding its data center capacity in Europe by 40% in two years, highlighting its investment in regional digital infrastructure. 💾
• Brad Smith emphasizes Microsoft's role in upholding digital resilience amidst growing geopolitical tensions, with a promise to contest any government order threatening European digital operations. 🔒
• Privacy is paramount; Microsoft vows to protect European data through its GDPR advocacy and innovative data boundary projects. 🔐
• Microsoft supports Europe's cybersecurity, illustrated by its massive aid to Ukraine and the introduction of a Deputy CISO for Europe. 🛡️
• Commitment to Europe extends to economic competitiveness, promoting open-source models and AI as key tools for growth. 🤝

Overview

Brad Smith, Microsoft's President, took to the stage at a pivotal Atlantic Council event to discuss digital resilience amid fluctuating geopolitical climates. His discourse underscored Microsoft's robust strategy to bolster Europe's digital infrastructure and empower its cloud and AI ecosystems. Smith enthused that these steps reinforce both connectivity and strategic competitiveness in the transatlantic sphere.

A significant portion of Smith's commitment centered on cybersecurity and privacy. He reiterated Microsoft's longstanding history of legal advocacy for privacy rights, promising to challenge any directive that may threaten digital operations within Europe. These declarations aim to assure European stakeholders of Microsoft's unwavering support and to uphold data privacy across its platforms.

Smith's further pledged to drive economic competitiveness through embracing AI and supporting open-source software development. With a view to future-proofing European enterprises, he articulated Microsoft's role as a facilitator and ally in Europe's digital evolution, emphasizing collaboration and legal integrity to sustain growth and trust.

Chapters

• 00:00 - 01:00: Introduction by Graham Brookie The chapter is introduced by Graham Brookie, the vice president of the Atlantic Council for technology programs. He greets both the in-person audience in Brussels and those joining virtually, noting the global and hybrid nature of the event. This introduction serves to set the stage for the discussions or presentations that will follow under his leadership or the associated technology programs.
• 01:00 - 10:00: Opening Remarks by Brad Smith The chapter titled 'Opening Remarks by Brad Smith' begins with a statement about the significance of the Atlantic Council, an organization that has been focusing on transatlantic relations for the past 70 years. The event, part of AC Front Page, highlights global leaders and emphasizes the role of the Atlantic Council in shaping the global future. The conversation is noted to be timely due to the current era of geopolitical and economic competition.
• 10:00 - 23:00: Microsoft's European Digital Commitments The chapter discusses the growing importance of technology in shaping our world and emphasizes the interconnectedness and mutual benefits of the United States and Europe. It highlights the necessity for digital resilience and strategic competitiveness, particularly within the transatlantic partnership. Additionally, the chapter stresses maintaining human connections that will shape the future, in alignment with these digital objectives.
• 25:00 - 55:30: Q&A with Mark Scott The chapter discusses the significance of a major American tech CEO, Brad Smith, Microsoft's vice chair and president, making his first public appearance of the year in Brussels. The timing is highlighted as important for dialogues on technology governance, trust in the digital ecosystem, and multilateral cooperation in cyberspace. Brad Smith's role at the forefront of these conversations is emphasized.

Microsoft’s Brad Smith on digital resilience during geopolitical volatility Transcription

• 00:00 - 00:30 [Music] [Music] Good morning to everybody here in person in Brussels and and good afternoon to those of you joining virtually this afternoon. Uh my name is Graham Brookie and I'm the vice president of the Atlantic Council uh for technology programs which now make up 1/4th of the
• 00:30 - 01:00 Atlantic Council which is a pretty big statement of priority for for an organization that's been focused on transatlantic relations for the last 70 years. Uh we're here today for an AC front page, the Atlantic Council's premier live platform spotlighting global leaders at the heart of our mission of shaping the global future together. And I'm really really excited for this conversation which is particularly timely. We find ourselves number one in an era of geopolitical competition and economic competition
• 01:00 - 01:30 increasingly defined by technology. We're also more connected than ever. And I want to be very clear about this. The United States is stronger with Europe and Europe is more is more competitive with the United States. It's more important than ever to explore how we can can sustain digital resilience and strategic competitiveness especially in the transatlantic context while we maintain and build like these conversations the human connection that shapes that future. Uh this marks the
• 01:30 - 02:00 first uh public event of this year of a of a major American tech CEO in Brussels in the capital which I think is a really important uh timing for the conversation. We're extraordinarily honored to be joined by Brad Smith, Microsoft's vice chair and president. Brad, for those of you that have not met him, has long been at the forefront of of many of these conversations, uh, technology governance, trust in the digital ecosystem, and multilateral cooperation in cyerspace. Whether
• 02:00 - 02:30 through Microsoft's work on AI, cyber defense, or support for democratic institutions, Brad brings deep experience navigating today's complex digital landscape and engaging with stakeholders like those of you in this room across government, industry, and civil society. It's my job to do the logistics for this event. So, I want to be clear about a couple of things. Brad will begin with some opening reflections on the current digital and geopolitical environment. Uh that will be followed by a conversation with my colleague Mark Scott of Fireside Chat. So they'll bring
• 02:30 - 03:00 some chairs up here. Uh Mark is part of our uh uh democracy and technology initiative at the Atlantic Council and has been a a longtime I think fair to say recovering journalist uh now with the Atlantic Council. Uh we'll also close the conversation with audience uh Q&A. And so the way to do that is through askac.org or oracengages through your devices. So, thank you again for joining us today and
• 03:00 - 03:30 please join me in welcoming Brad Smith. Thank you. Well, thank you all for coming this morning. I really appreciate it. Thanks to all of you who are you watching online. Um I have been coming to Brussels for 36 years. Uh, I don't think I've ever come with less sleep than I have arrived today, having literally just flown overnight from Washington DC, doing a number of meetings there and
• 03:30 - 04:00 basically getting off the plane to come and be here with you. Um, I think we are at a moment in time when business needs to be a bridge across the Atlantic to be a voice to help enable our governments to find a common path together. And what I want to talk about today is also in a blog that we're publishing basically this moment that you'll be able to read to see all of the details, but it gives
• 04:00 - 04:30 Microsoft's perspective not only on the issues of the day, but I think more importantly where we stand in supporting all of our customers across Europe. Microsoft has been in Europe even longer than I have in terms of coming here. In fact, the company first got involved more than 40 years ago in the first decade of its life. Interestingly, the very first product
• 04:30 - 05:00 that Microsoft localized into European languages was also the first product that I ever bought actually as a software product. It probably changed my life more than anything I ever bought. It was Microsoft Word. This was 42 years ago. And we actually pulled the code out of our archive. So you can see the code that was written in French and German. And it put our company on a path that
• 05:00 - 05:30 has given us the opportunity to connect with to support to work with every part of the economy across Europe to work with companies across Europe to become part of the European economy. And we started small with that first product. I joined Microsoft in 1993. My first three years were spent in Paris at what was then our European headquarters. And of
• 05:30 - 06:00 course, in recent years, we have been embarking on a massive construction project across all of Europe, building data centers that I could not have even imagined when I first joined the company in 1993. We have data centers in 16 countries. You see them displayed here. It gives us the opportunity as few companies have to connect with innovation in every part of the European
• 06:00 - 06:30 economy, with European governments, with European open-source developers, and with European nonprofits. But what I'm really here to talk about today is what we're announcing today, Microsoft's European digital commitments. This is a moment in time when we understand that there are questions that customers have, that governments have, nonprofits, citizens have about the role of American
• 06:30 - 07:00 technology in a time of greater geopolitical volatility. And therefore, I feel it's important to speak on behalf of our company to provide an unambiguous commitment that we are making for all of our customers across this continent. And there are five, and I'll walk through each of them briefly. The first is our commitment to continue the work that we've been on to help build a broad AI
• 07:00 - 07:30 and cloud ecosystem across Europe. So today we're announcing that during the next two years we'll expand our data center capacity across Europe by another 40%. This will enable us to double our data center capacity in Europe over the course of four years from 2023 to 2027. It will enable us to operate 200 data centers in 16 countries across
• 07:30 - 08:00 Europe. But in a way that I think speaks to the questions of this moment, I want to underscore something else. We understand that Europe wants a broad AI and cloud ecosystem. It wants to have a variety of suppliers on which it can rely and we're committed to supporting that kind of broad approach. So with respect to Microsoft's own work in this area, it is multiaceted.
• 08:00 - 08:30 We have our public cloud and our public cloud data centers which are really a foundation for everything we're doing. But a second alternative that we have created in partnership with European governments and companies is a set of sovereign cloud data centers operating in Germany, operating in France with local partners in Germany with SAP and with a subsidiary of Burlesman in France
• 08:30 - 09:00 with Capgeemini and Arange. These are data centers that have Microsoft technology inside, but they're operated by German companies. In addition, we are committed to partnering with European cloud providers. This is something we've embarked on in part because of the nudge of the European Commission and the concerns of the European cloud sector. And so it led us to commit to greater
• 09:00 - 09:30 and deeper collaboration with European providers to provide them with the ability to use and run Microsoft software on terms that are more favorable than we give to Amazon and Google. This we believe is important as longstanding ongoing support for European cloud companies. In addition to that, we are focused on other alternatives as well.
• 09:30 - 10:00 We appreciate that Europe will likely want new sources of competition and cloud computing, including potential investments of public funding. We will be a good supporter collaborator for the entire ecosystem here in Europe. That is the first commitment that we're offering. The second is a commitment to uphold Europe's digital resilience even
• 10:00 - 10:30 when there is geopolitical volatility. I think we need to recognize that we are navigating together an unusual perhaps an unparalleled moment of geopolitical volatility across the Atlantic. And it is a time when we believe it's important for us as a business to be a voice of reason across the Atlantic. It's why I spent yesterday in Washington DC talking to American
• 10:30 - 11:00 officials about the issues that are important and frankly what I would be saying here today. But what we want Europeans to know is that they can count on us. That's why we're creating today and sharing a threeprong commitment to uphold Europe's digital resilience. It starts with what we have built and will manage as a European cloud for Europe.
• 11:00 - 11:30 Our European data centers are managed by European companies under European law subsidiaries of Microsoft. They will roll up. they do roll up to a European company that will have a board of directors that consists exclusively of EU nationals, ensuring that European voices are heard loudly and clearly within Microsoft. But the second step is more important still. It is a digital
• 11:30 - 12:00 resilience commitment. We are committing today that if any government anywhere in the world ever issues an order that seeks to compel Microsoft to suspend or cease operations and support for Europe out of our data centers here, we will go to court. We will take every legal avenue to contest
• 12:00 - 12:30 any such order. I first want to say I regard that as exceedingly unlikely to ever happen and we appreciate that it is a real concern of people across Europe. It's not actually a topic that people are even talking about in Washington DC. But we know we need to address it and we know that Europeans need to be able to count on us. That's why we're not just offering this as a pledge with words. We
• 12:30 - 13:00 will implement this as a contractual commitment by Microsoft and by Microsoft Corporation and all of its subsidiaries in our contracts with national governments across Europe and with the European Commission. So that we're obligated to stand up and go to court if the situation ever arises. And I want people to remember we have a track record of doing precisely that. We went
• 13:00 - 13:30 to court four times against the Obama administration over the protection of customer data and privacy, including European data. We went to court against the Trump administration to protect the rights of employees who are immigrants. Twice we've gone all the way to the United States Supreme Court. We not only go to court, we tend to win the cases we bring. But finally, if we ever find
• 13:30 - 14:00 ourselves losing, we will put in place business continuity partnerships, arrangements with European partners so they can step in. they can access our code where we'll have a backup copy of it stored in a secure repository in Switzerland and they will be in a position to ensure the continuity of our services for our customers across Europe. And we also want to make an important statement today and a
• 14:00 - 14:30 statement about where we stand and how we think about the role of European law. So when you look at the blog online, you'll see these two paragraphs and as you can see, we get it. We believe in the rule of law as a company. We believe in the role of European law across Europe. We always have. It's been fundamental to our ability to build a business here, a
• 14:30 - 15:00 single market that would better serve customers. And I'm sure we'll talk more about this in the Q&A. This includes competition law. This includes the digital market act. This includes other important areas of European law and regulation. We're committed not only to building digital infrastructure across Europe. We're committed to respecting these laws and the role that the rule of law plays across this continent.
• 15:00 - 15:30 The third commitment relates to privacy that we'll continue to protect the privacy of European data. This has been not just a quest, but it's been a bit of a data crusade, if you will, because we believe fundamentally in privacy as a human right that needs to be protected around the world. That was born in many ways in Europe itself. That's why we
• 15:30 - 16:00 were not just an inherent but an advocate for the GDPR not just in Europe but frankly for worldwide application when it came into force. It's why we've pursued what we call our EU data boundary project. A project that we completed last year that gives European customers the ability to store and have their data processed in Europe. It's why we've added to that data boundary project with additional steps we have
• 16:00 - 16:30 taken through what we call confidential compute so that when our customers are using our Azure platform they have the control they need over their data even including control that covers whether and when Microsoft can access their data to provide customer support. You will see us take additional steps in the following weeks and months because what we're offering today is not only these five commitments but the first wave of
• 16:30 - 17:00 concrete steps that we want to take. So I will say stay tuned because we'll have more to say and announce and concrete steps in this space. The fourth commitment I want to go to is also frankly for us something of a crusade. A crusade to protect the cyber security of Europe. A crusade to protect the cyber security of all of the
• 17:00 - 17:30 countries of the NATO alliance of the European Union and other countries around the world. And as you know for Microsoft this has always included [Applause] Ukraine. We were one of the first companies to step forward. We evacuated Ukrainian data to other data centers across Europe so it would be protected even when cruise missile attacks
• 17:30 - 18:00 destroyed Ukraine's own government data center. We have provided more than $500 million, half a billion US dollars of free technology and financial assistance to Ukraine since the war began without interruption. We have never stopped. We have included not just threat intelligence that we actively share and we have never stopped but also active
• 18:00 - 18:30 work to disrupt cyber attacks against Ukraine. We want people in Europe to know that they can always count on Microsoft for our cyber security support. That's why today our SISO, our chief information security officer announced that we've created a new position, a deputy SISO for Europe, who will report directly to our SISO at our headquarters in Redmond and be even more involved in
• 18:30 - 19:00 addressing European needs, issues, and concerns. And we want as well, as I spell out in the blog, the people of Europe to know that just as we've been committed to the GDPR for privacy, we recognize the importance of new European cyber security regulation. We're committed to implementing it and complying with it as it becomes what we
• 19:00 - 19:30 see as fundamentally a new gold standard for cyber security law around the world. Here too, we will have additional steps that I'll be back announcing in the coming weeks where there are initiatives that we will be launching to further strengthen and broaden our cyber security protection for Europe. And finally, we are committed to strengthening Europe's economic competitiveness, including for
• 19:30 - 20:00 opensource developers, open-source code, open-source models. People often ask me when I visit different European capitals, when I describe all the data centers we're building, who can use it? And the answer is we are building this for Europe as a whole, for the companies that we've worked with over the last 50 years, and for the startups and scaleups of today
• 20:00 - 20:30 and tomorrow. It's been an enormous privilege for us to frankly be connected to so many parts of the European economy. And our view is that AI is the next great generalpurpose technology. A technology that will impact every part of the economy like electricity did more than a century ago. This is a moment where as the European leaders have recognized, there
• 20:30 - 21:00 are real European needs when it comes to building a more competitive economy. We see this everywhere in the world and we fundamentally believe that AI will be the indispensable element in building more competitive economies for every country in Europe and every country in fact around the world. We know that Europeans need to have confidence that they will be able to use
• 21:00 - 21:30 what we are building at the platform and infrastructure level to fuel economic growth to advance productivity gains. That's why a year ago in Barcelona, I announced our AI access principles. That's why as we look back over the past year, we're encouraged by the progress we've made. We now have more than 1,800 AI models running on Azure available to the world and enabling
• 21:30 - 22:00 people who create something new to make it available to everyone and go to market much less expensively much more quickly. So many of those 1800 models are open-source models. So many of them involve European companies and entities like Mistral and Hugging Face. And you will see us take additional steps in this space as well to ensure that
• 22:00 - 22:30 governments and customers across Europe have the confidence they need that they will be able to put this technology to work. Ultimately, these five commitments connect together and we see them as very much complimentary. They come out of the conversations that we've had with government leaders and with customers across Europe. Today is an important day, but it's
• 22:30 - 23:00 really the first day in work that we will continue to pursue to implement these commitments and to build on them. Ultimately, what we are doing is building a European cloud built in Europe to run for Europe fundamentally to serve Europe. And I believe it's a moment in time which when it's important for American businesses to underscore for Europe that they can
• 23:00 - 23:30 count on us. That is our view at Microsoft about the role we play. We celebrated our 50th anniversary as a company the first week of this month. I think it's fitting that as we approach now the end of the month, we look forward in here here in Europe to a place that has been so important in our past. Microsoft would not be the global
• 23:30 - 24:00 successful company that it is today. Without Europe, without the European customers that bow on us, without the European citizens that bet on us, Europe has always been good for Microsoft. It's been good to Microsoft even when we had disagreements and challenging days as I was often in the middle when those occurred. But throughout it all, we have always appreciated the role that European laws, European values, the
• 24:00 - 24:30 European customer base and the European economy plays. So fundamentally we want the people of Europe to know that they can always count on us. Microsoft support for Europe always has been and always will be steadfast. Thank you very much.
• 24:30 - 25:00 Good morning everyone. Can everyone hear me? My mic on. Wonderful. Um Brad, thank you for that. Um it's a busy crowd. Hello. My name is Mark Scott. I'm part of the Atlantic Council's Democracy and Tech Initiative. Just to remind everyone
• 25:00 - 25:30 just so we can get going, I want to take as much Q&A from the audience as possible. We have many people dialing in online. So, just for pure fairness, I'm going to take um questions via the askac.org webpage. Uh so, if you have questions, I know some have come in already. Thank you very much. I would only ask, please say where you're from. I'd rather have u um I don't want anonymous questions if that's possible. So, thank you for that. Um Brad, first of all, do you need a cup of coffee after your If you've got one, I'll take it, but I'll use the water. Perfect. Um
• 25:30 - 26:00 there's a lot to unpack uh in what you said and I want to pick up on one thing I think in in your second commitment was we're recognizing an unparalleled moment across the Atlantic and I think I've been doing this for 20 years so maybe not as long as yourself but it I feel it definitely is the case. You've laid out a lot of commitments to Europe for Microsoft as a as a business but we are living in somewhat transactional times on both sides at just the US. I would argue the Europeans are moving that way as well. As much as the commitments are there, what levels of certainty can you
• 26:00 - 26:30 and Microsoft provide those in the room, those in the institutions, those across the wider Brussels and European Union context that you are going to live by those? They they there's there's a lot of detail and we'll get into some of the some of the legal elements in a minute, but there's one thing saying it and there's one thing living it. What is the certainty you can provide? Well, I think it's a fair question. The first thing I would want everyone to know and even remember is look, our business relies on the trust of our customers. Um, without
• 26:30 - 27:00 that it starts to decline and dissipate and can do far faster than probably most people would appreciate. Um, and I think at a moment like this, one has to start with words because words are what we use to communicate. But at the end of the day, I think people want to know that there's more than words that we're offering. That's why we're prepared to back this up with contractual commitments. We live up to our contracts. It's fascinating. Yeah. In
• 27:00 - 27:30 Microsoft's 50 years, you know, we've been sued and we've even been fined here in Brussels for violating competition law. What you will not find is a case that found that we failed to live up to a contractual promise. when we put words in our contracts, we live up to them. And so that's one of the things we've been doing on data privacy. Yeah, we have a data privacy pledge where we pledge to go to court.
• 27:30 - 28:00 Um when there is and it doesn't happen very often, I should underscore especially for uh enterprises for organizations. Um but when we get say a blind uh subpoena or or search warrant uh and it comes from a government uh we insist on the right of the uh customer to be informed whenever say it's a legit a legitimate enterprise. If it's a criminal you know organization it's a different question. But if it's a legitimate business it's like no you
• 28:00 - 28:30 have to tell the customer and not just rely on us and we put that in our contracts and we live up to it. That's why we're adding this contractual commitment and that's why I would say look at our track record. We go to court and we tend to win. But even if we don't win in this instance, we've got this business continuity partnership arrangement. So I appreciate that this is a moment in time when people may want to see multiple layers on which they can
• 28:30 - 29:00 rely and that's why we've created multiple layers in which in the area we're talking about here say digital resilience. Thank you. Wow. Coffee arrives. That's good. Anyone else want one? Um I want to unpick the digital resilience commitment that you mentioned and the idea is if you are asked by any government worldwide to cease operations Europe, you will go to court. You specifically domain a specific government in there but you've also come from Washington to get here. Could you get without sort of talking about conversations that you've had with any
• 29:00 - 29:30 type of um country's officials, what is the feedback you're getting from in terms of your willingness to go to court if that does happen? Well, first of all, I I think clarity is crucial so that people know where other people stand. I think calm but determined clarity is often especially helpful for issues like this. Um, you
• 29:30 - 30:00 know, so I I I and I I think it needs to be coupled with clear communication. Um, it's fascinating right now because I think there is a real opportunity to add to the communication that is taking place across the Atlantic. Um, it's why I left Seattle on Monday and flew to Washington DC so I could let officials in
• 30:00 - 30:30 Washington DC know what I was going to say in Brussels today. And in an aspect that didn't surprise me in the least when I said that there were people across Europe, especially in government, who were concerned about, say, their ability to rely on American technology, they're concerned that the US government might or any government might get up one day and shut off
• 30:30 - 31:00 access. The response I got was this was the first time they'd ever heard of this. it it's the first time the idea had ever been mentioned to them. And I would just say when you really step back, that's not the most unusual thing in life. You know, there's a lot of times in life if you're thinking about your family or your relatives or your colleagues. Yeah, there are days when people spend more time talking about each other than talking to each other.
• 31:00 - 31:30 And so, yeah, I think that I hope that business can be a a bridge across the Atlantic. Microsoft, I think, needs to be a voice of reason in capitals around the world. Um, we want to provide digital stability in a time of geopolitical volatility. And that doesn't mean that we'll be able to avoid all
• 31:30 - 32:00 controversy, but I hope we can be a force that helps bring people together to understand each other's concerns. As someone who who myself was in DC last month, I think it's very important to maintain those ties wherever you are. So if you have an opportunity to go to Washington and Washington folk to come to Brussels, I think it's very important. You mentioned the the role that business can play, but there are other primarily American tech firms that have taken a somewhat overtly antagonistic position towards Europe's
• 32:00 - 32:30 new regulatory playbook, particularly when it comes to the DMA. You mentioned it, Microsoft has has had its own competition issues in Brussels over the over the years. What do you make of that? I'm I'm not asking you to speak for other companies, but there is a if you talk about business's role, there are a myriad of different responses currently going on from from your counterparts in the US. So, how do you frame that? Well, yeah, I think it's another aspect of you just think about life, we're all we're
• 32:30 - 33:00 all a product of our own experiences. We're an older company than some of the other folks uh who run great companies. I mean, we always say at Microsoft that we compete uh with some of the greatest athletes in the world in the tech sector. Um, but we've we've had a different upbringing, if you will. Uh, and I probably personify that as much as anybody because I, you know, started my
• 33:00 - 33:30 career so much, you know, first in London and then in Paris. um you know was coming here in the 90s and literally spent a decade you know trying to mend fences um with governments that really started often with the European Commission itself and you know one of my overriding reactions to the issues in Europe and the United States and around the world
• 33:30 - 34:00 for Microsoft was that it's often hard with competition law in particular when technology is changing so quickly to know what the rules are going to be because the typical path historically around the world starting with really the Washington and then and then Brussels was to pursue competition cases and you really wouldn't know what the rules definitely were until they
• 34:00 - 34:30 ended because The case was all about trying to figure out and and frankly argue about what the rules would be and they took a long time. They always have. This has been true since the first big antirust case against Standard Oil and John D. Rockefeller in the early 1900s in Washington DC. And most people who are in this field, if you end up, you know, being at a
• 34:30 - 35:00 company that gets involved in something like this, will say expect it to take at least a decade. Do you know that the first part of the Microsoft case was with the Federal Trade Commission? That was in 1990. And the very last chapter of that book, which isn't the most interesting book ever written, by the way, was the final resolution in a Canadian court in 2019. That was a 29year effort to hammer out what the
• 35:00 - 35:30 rules are. So when people first proposed the digital markets act here in Europe, you know, my reaction was and it remains that the DMA provides clarity about the rules without having to spend a decade going to court to figure it out. We have two products that are subject to it. Microsoft Windows and the LinkedIn services. And believe me, nobody ever likes every rule. That's true as
• 35:30 - 36:00 citizens, I'm sure, not just companies. And there are days when you lose arguments. There are days when you lose cases. But with clarity, businesses can adapt. And what's interesting is in some ways what I worked so hard to do was to create an environment that would give Microsoft clarity so our leaders could spend their time innovating and that's what the
• 36:00 - 36:30 company did. What does Microsoft stand for in the annals of technology history perhaps more than any other company? A company that was born, was the technology leader, was knocked off its pedestal by new companies and found a path back to leadership through innovation. But any day that people are spending worrying about what the rules are or arguing is a day that they're not
• 36:30 - 37:00 spending on innovation. So I fundamentally believe that while I respect our competitors and their views, we have a different point of view and we believe that this clarity is not just good for Europe, it's good for technology because it enables us to focus more of our energy on innovation. I would also argue of all the digital regulatory issues right now, competition seems one where the US and Europe are more aligned than others. I mean for the
• 37:00 - 37:30 good and for the bad. So, uh, that's actually true. Yeah. Um, I'm going to jump into some questions from the audience, mostly because they are better than mine, and I feel like I should steal them when I can. Um, one here, and I think, forgive me, Tim Luther, I'm hoping I'm getting this right. There's a lot of discussion around what happens after the 90-day postponement of the tariff ends. And there's ongoing discussions both between EU and US officials about what that looks like. My sense has been that they're going to move away from any type of digital element of it and focus on traditional
• 37:30 - 38:00 goods. But the question here from Tim is how would Microsoft handle if it if the EU governments were to impose drastic tariffs on digital services or if the US government wanted to suspend trade relations with the with Europe? Well, um I think business needs to be a bridge across the Atlantic. That doesn't mean we get to drive the cars that cross it. Um you know, so I I think you know, we're always going to be focused on serving our customers. Um, you know, even if there are changes in the trade relationship, I don't anticipate
• 38:00 - 38:30 anything that would disrupt our supply. If economics change, we'll have to manage through them. Um, the interesting thing is the economics of the cloud are actually easier to manage than the uh say the economics of digital devices uh like laptops or other things that may come from say China. um it may actually make it even more economical for people uh you know to focus on cloud computing
• 38:30 - 39:00 but we'll just have to see uh and I don't think it I really uh advance uh the the dialogue by speculating here on one thing or another um but we'll always be a voice of reason and we will always be a force to help our customers manage through whatever comes so I'm based in London and so of a bit of an outsider in Brussels although I spent a lot a lot of time here and same for for Washington and one thing I' I've noticed even in the last end of the last commission now into the the new Europe
• 39:00 - 39:30 commission is there is a more robust Europe ccentric version of digital rule making that's going on here we're looking at sort of investment in EU based AI gigafactories and looking to increase competitiveness via the the drugy rule board etc and I would argue it's sort of a sort of make Europe great again component in terms of investing domestically so it's not just a US issue that we're facing currently that's all well and good but like it or not despite the commitments you're making today in terms of European official um executives
• 39:30 - 40:00 European entities and European rule of law you are still nominally based in on the west coast and you are seen as an American company. So if we are looking at a more robust position for the European Commission where it is European based solutions and ideas for European based problems is there space for Microsoft? Yes, you're providing some of the underlying infrastructure and support, but you're inevitably not European as a company. So, so what is the space there for you when the European Union at large is moving towards a more instrument is a
• 40:00 - 40:30 long word Europeentric view of how they want to do business. Well, I I would offer uh three thoughts. The first is look, we respect the fact that European governments will make their own decisions and we don't get a vote, but we will adapt and we'll be supportive of whatever they decide because we definitely need a technology ecosystem that in which people can interoperate with each other's services,
• 40:30 - 41:00 people can collaborate and support each other. But we respect that other people will make these decisions, not us. The second thing I would say is I think that one of the great things about the Draggy report is it recognized that you don't need to build everything yourself in order to get the benefits of it. And yeah, I just analogized to Microsoft's own experience. You know, there were days every day in
• 41:00 - 41:30 2010 and 11 and 12 and we'd get up in the morning and say, "Oh my gosh, we don't have a great phone. Apple has a great phone. Samsung has a great phone. We don't have a great phone." We tried to build a great phone. We even acquired the business from Nokia. And then when Satia Nadella became CEO in
• 41:30 - 42:00 2014, Satia fundamentally reached two conclusions. The first was, I don't think we're going to be too successful in the next couple of years in building a great phone. But more important, he said, we can succeed without one. We can build software that runs on other people's phones. We'll bring Office to the Mac. will be the company that runs everywhere. In short, he said, we will
• 42:00 - 42:30 invest and double down on our strengths. There are so many days when the number one thing that strikes me about Europe is that I think people can run the risk of making the same mistake we made. You envy what you don't have and fail to appreciate what you do. The European economy is in so many
• 42:30 - 43:00 ways one of the world's greatest maybe the world's greatest domain expertisebased economy. What do I mean by that? Take a domain like machine tools. Take a domain like pharmaceutical products. Take a domain like chemicals. Take a domain like automobiles. Just go from domain domain to domain and you find European leaders,
• 43:00 - 43:30 companies that frankly have a much longer life and sustained track record of success than you tend to find in the United States. So Europe can and should do many things. And if Europe chooses to say use public money to invest in data centers, that's Europe's decision to make. But my message would be remember that all of those great domains need to remain globally
• 43:30 - 44:00 competitive. And the key to global competition is harnessing the power of AI. So it's good that you have American companies here. It's good if you want to add to that, but more than anything else, remember most of all of these enormous strengths that is the fundamental pillar of Europe's standard of living. Make sure they remain at the forefront. And I hope that then people will enable us to do what we want to do,
• 44:00 - 44:30 what we've always done, which is support every part of the European economy. as someone who was there at the launch of the Windows phone. It was not a good phone. It was it just wasn't. I actually think it was better than people think, but that's probably not worth debating. Well, so another question u from the audience and thanks to Jan for this. Um you talked about some of the the commitments Microsoft making in terms of litigation, but how to put this politely? There are
• 44:30 - 45:00 some questions in terms of the the executive and judicial branches in the US currently. Are there further steps that Microsoft might be willing to do to to to protect uh it it sort of European data centers, you know, poison pills or other legal technical devices to to just to ensure that if there is a question that that data is secured here in Europe? Well, I think there's always room for us to learn more, to get smarter, to consider other ideas. um you know and there's plenty of opportunity
• 45:00 - 45:30 for us to have a dialogue especially with uh European leaders and European customers in the months ahead. Uh having said that I do fundamentally believe that this is what you know we in the tech sector call an edge case. It's a very unlikely scenario in which to arise. I feel very good about what we're putting in place today. will stand behind that. I believe in the rule of
• 45:30 - 46:00 law. I believe in the integrity and independence of the judicial system in the United States. I continue to have great confidence in that. I think we all should. I think we should all be a voice that supports the rule of law in the United States, in Europe, and around the world. and if there's other ideas that haven't occurred to us, I'll definitely be interested in getting smarter. So, I must hold up my own biases as a
• 46:00 - 46:30 both British, Irish, and American citizen. So, I I very much wedded to the transatlantic um uh relationship myself personally. There's a variety of questions here looking at what that looks like going forward. and as someone who covered while I was a journalist the trade and tech council quite extensively in the previous commission and the previous white house that there were some significant benefits of maintain those on ongoing relationships that currently isn't happening we are looking at uh the EU US privacy framework having potential questions around it we're looking at potential uh trade uh
• 46:30 - 47:00 difficulties to put it lightly uh between Brussels and Washington you mentioned repeatedly that you business can play a role in bridging that gap I would argue that people like a land council would too, but again I'm I'm also biased. Um where where can we have some easy wins? Where where are the opportunities to maybe get past some of the politics with a small P and focus on areas of you mentioned cyber security, you mentioned Ukraine, you mentioned defense areas where there is ongoing mutual and frankly bipartisan uh
• 47:00 - 47:30 agreement on on the need to cooperate. Well, let me offer a couple of specifics, but then let me just say a word about the general issue because I think it's one that we can all help address in a constructive way. I do think we have a concrete opportunities in the cyber security space. I think we have a concrete opportunity in the privacy space. Um, one of the quests that we've worked to nurture uh, more
• 47:30 - 48:00 than any single company really is an international agreement across the Atlantic that would govern government access to data, especially public sector data. And one of the aspects of the cloud act when it was adopted was a provision to create this statutory authority for these agreements. So the US and the UK quickly entered into such an agreement. The US and Australia
• 48:00 - 48:30 entered into an agreement and you we've long supported and advocated for an agreement between the US and the EU. The EU really needed to get the EV evidence act done in order to have its own legal basis to then I think negotiate effectively with the US. Let's get that done. Let's get that done this year. This is the time negotiators on both sides of the Atlantic have been working on it and let's use it to assure each
• 48:30 - 49:00 other that there's a common framework for the protection of privacy on both sides of the Atlantic. But then let me go back to the more general comment or theme because I've been thinking a lot about this. Yeah, one of the uh maybe unusual features of of Microsoft in the tech sector is whenever there's a new major world or technology development you know we often try to go back and learn from history and you know we did
• 49:00 - 49:30 this in the great recession in 2008 2009 and one of the things that really struck me that we and I thought a lot about was there's an economic theory that basically says that you have a major financial panic on average every 70 to 80 years because that's the time of a human lifespan. So by the time you reach the 80year point, everyone who had any
• 49:30 - 50:00 living memory of the prior failure, the risks that were taken, the problems that were created, they're all gone. So if you look at the great recession in 2008, it was 79 years after the start of the great depression in 1929, which was almost exactly the same amount of time before what was a great panic in 1857, the real the first real
• 50:00 - 50:30 global economic pan panic. And you can go back with these 80-year interview intervals to the South Sea bubble, which was in the UK, or even the tulip bubble in the Netherlands. And what I've been thinking about recently is that just as human memory loses that conscious, you know, importance, that regard for problems,
• 50:30 - 51:00 you can also forget about your strengths. So what are we all going to commemorate eight days from now? It's the end of the war in Europe 80 years ago. What were some of humanity's greatest accomplishments in the 20th century? It's what followed. It was this investment in NATO, the creation of the transatlantic alliance, the Bretonwoods framework, the
• 51:00 - 51:30 international monetary and financial and trade institutions. We created it all. And there quite rightly are people on both sides of the Atlantic and in the world today who look back and see enormous opportunities for improvement. And I think it's important for everyone to appreciate the legitimate concerns that people on both sides of the Atlantic and around the world have with the global
• 51:30 - 52:00 economic system. But let's not forget what led us to create it in the first place. Let's not lose sight of the tremendous benefits this created. And I think business benefited as did everyday citizens from all of this that came together. And so I think we're at a moment in time when we need to use our voice to connect with
• 52:00 - 52:30 people to help people think about these things that built this framework across the Atlantic. And we need to, you know, speak to people's minds, but we also need to speak to people's hearts and show how this has in so many ways, you know, created peace and stability and rule of law and freedom and often times prosperity and let's continue to nurture it. We need to take people forward by
• 52:30 - 53:00 building on that real thing that I worry people are forgetting. One thing I I worry about is mis mis miscommunication, misconceptions on both sides. Uh when as someone who is a very proud uh European and American, I spend a lot of my time talking to folk in in in DC about no European protectionist, they just have a different way of doing things. and trying to understand the DMA, DSA, and all the alphabet soup of regulation isn't about keeping Americans out. It's about opening it up for
• 53:00 - 53:30 opportunities for for others as well as US firms to to to benefit from the European markets. Finally, just what is a misconception you think those of us here in Brussels maybe have about Washington currently that is is unhelpful? What is one thing you you know, as someone who spends a lot of time in DC, what is something that you think we're getting wrong about the current situation? Well, I I think of for a lot of people in Europe, you're people I understand they're trying to make sense. You know, what what's going
• 53:30 - 54:00 on in the United States? What are people thinking? Uh and I think it's important to recognize that despite the eight decades of progress that I just pointed to, there are people who've been left behind. Uh you know, there are people who feel like they haven't benefited. you know and especially you know over the last five years they saw the impact of inflation on their standard of living um and you see that in Europe as well and you see it across the political
• 54:00 - 54:30 spectrum I think you know it's a mistake to assign it to just one part of the political spectrum so there are real needs that need to be addressed and there are questions that people have about trade and you know trade restrictions whether they're you know of one sort or or another. Um and it can be constructive defined ways to address these um you know let's build a future
• 54:30 - 55:00 that offers more promise to more people and let's think about the role that technology can play in doing that. Let's make AI a force for good for economic competitiveness and productivity growth and a tool that helps people. Um but let's you know contribute to I think the dialogue in every country that is about not only ensuring say more productivity and economic growth but a path to progress that reaches more people. Um, and I
• 55:00 - 55:30 think it's good to have the opportunity to frankly spend more time listening to each other. Um, we live in a world where there's so much news and so many things, you know, distracting us from each other. Um, that there is still no substitute for time spent with each other, listening to each other in person. I think on that note about active listening, uh, we're gonna call it wraps. Uh Brad, thank you so much for
• 55:30 - 56:00 joining us and enjoy your your day in Brussels. Thank you. Thank you. And thank you so much everyone in the audience for joining us. I know there's a lot going on this week in Brussels as well as people kids being off school. So thank you for joining us if you're if you join. And then for those online and also those who will be re-watching uh on the east coast later on. Thank you for joining us and watch out for more AC front page events on our website. Thank
• 56:00 - 56:30 you very much. Thanks. [Applause] [Music]