MSFT Microsoft Corporation

By Sara Castellanos 

NEW YORK -- Technology companies increasingly enmeshed in social issues need to decide on principles to guide them as they face challenges related to regulatory compliance and customer trust, said Brad Smith, president of Microsoft Corp.

With artificial-intelligence-enabled technologies equally capable of benefiting society or tearing it apart, technology vendors -- and companies deploying their technology -- no longer have the luxury of remaining bystanders, focused solely on delivering the best product.

"You have to know what you stand for," Mr. Smith said at a Thomson Reuters event Friday. "You have to be prepared as a business to some degree to connect the courage of your convictions with a hardheaded focus on business."

Microsoft's principles of transparency and privacy have at times caused the company to take stances that are at odds with governments, Mr. Smith said.

Social and political issues are becoming more important for technology businesses, shaping perceptions of reputation and brand. "Large tech companies play a vital role in our modern economy and as such cannot avoid being entangled in important social issues, which often have no easy answer," Jonathan Gruber, a Massachusetts Institute of Technology economist, said in a recent interview.

Mr. Smith said Microsoft won't allow any government to put eavesdropping equipment in one of its data centers. Business customers who store their data in Microsoft's cloud retain the rights to that data, and the tech giant becomes the steward and protector of that information, he said. Microsoft has threatened to shut down data centers in undisclosed countries when such surveillance requests come up. "Whenever we've been forced to push, governments have backed off," he said.

Microsoft won a legal battle with the U.S. in 2016 when a federal appeals court ruled that the government couldn't force the company to turn over emails or other personal data stored on computers abroad. Congress, though, passed a law in 2018 giving U.S. investigators access to data stored on overseas cloud servers.

Microsoft also is taking a stand on AI-based facial-recognition systems, calling for government regulation of the technology. Laws can reduce bias and the risk of discrimination, he said.

Facial recognition can have important societal benefits, he said, mentioning a nonprofit group in Brazil that reconnects families with missing children using facial recognition. "It's hard to innovate if you can't use something, and it's hard to learn if you can't innovate," he said.

The company won't sell facial-recognition services for the purposes of mass surveillance anywhere in the world, he said. Microsoft has turned down a specific deal for the broad use of facial recognition in an undisclosed country, he said.

"We thought it raised the risk of being used by a government to chill freedom of expression and prevent people from being able to assemble and protest," Mr. Smith said.

Other Microsoft executives have also been vocal about the need to help guide companies through ethical challenges, specifically those related to AI. Microsoft last year created a position to help companies deploying AI learn how to prioritize ethical principles, including fairness, accountability and transparency, in algorithm development.

Mr. Smith, also Microsoft's chief legal officer, joined the company in 1993. A book he co-wrote, "Tools and Weapons," was released this week. It discusses Microsoft's take on a range of societal issues that have become ubiquitous in the technology sector, including national surveillance, technology's role in public safety and challenges in rural communities that lack fast internet connections.

Write to Sara Castellanos at sara.castellanos@wsj.com

(END) Dow Jones Newswires

September 13, 2019 17:43 ET (21:43 GMT)

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