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Microsoft chiefs say big tech antitrust issues can be solved with laws, not lawsuits

CEO Satya Nadella and President Brad Smith see better ways to rein in big tech.

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Microsoft's history with antitrust gives it an unusual perspective about tech policy these days.

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Microsoft built a monopoly on the back of its Windows software to power computers and the Internet Explorer web browser. A judge even pronounced that finding in 2001, after a three-year government investigation into the company. But after that, Microsoft effectively got a multimillion-dollar slap on the wrist, and continued being Microsoft.

Two decades later, the US government is ramping up an antitrust debate focused on Amazon, Apple, Facebook and Google. Though Microsoft isn't a target this time around, the company says there are key lessons governments should take from its 2001 case.

"Twenty years ago, almost solely the vehicle that governments used was an investigation and a lawsuit. It was a case against individual companies," Microsoft President Brad Smith said Tuesday during an editorial roundtable with Microsoft CEO Satya Nadella. This time around, Smith said, governments appear to realize that legislation can help solve larger concerns about competition. "I think regulators have broadly concluded that cases are both too narrow and too slow."

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Microsoft President Brad Smith (left) and Microsoft CEO Satya Nadella at a shareholders meeting, pre-pandemic.

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The European Union has introduced ideas like the Digital Markets Act, which seeks to spell out how much companies with large user bases can promote their own products to users ahead of those from a competitor, and the Digital Services Act, which would put pressure on companies to do a better job moderating their platforms. Tech companies could face fines of up to 10% of their global revenue -- easily reaching into the billions of dollars -- for breaking these rules if they're implemented.

The EU isn't the only government targeting tech. Microsoft's comments come at a time when governments around the world are expressing concerns about increasing signs of bad behavior among tech companies. Amazon, Apple and Google have been accused of kneecapping competitors by pushing their own products to the top of search results, deservedly or not. Facebook has often failed to stop the spread of disinformation, misinformation and hate speech.

To Nadella, this is part of a larger problem with the tech world, where companies worry about growing first before they worry about unintended consequences that come with that type of scale. For example, he said, companies need to consider how their growth can impact people's trust. And whether the company's being fair as it grows.

"The business model and the technology need to account for the unintended consequence, with the unit of scale being one," he said.

For many tech watchers, that's a bit rich coming from the CEO of Microsoft, a company whose software reached a worldwide scale so quickly and forcefully that it eventually led to the antitrust ruling in 2001.

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The European Union is debating several laws designed to rein in big tech.

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Nadella's tried to soften that killer instinct that came from Microsoft's co-founder Bill Gates and his successor as CEO, Steve Ballmer. Instead, Nadella talks about Microsoft as a company built around helping other companies succeed. "You join here not to be cool, but to make others cool," he told CNET in 2018. "You want to be cool by doing that empowerment. It's the result that matters."

Smith often acts as Microsoft's outspoken voice on political and policy issues that affect the company and its employees. 

He's also weighed in on larger legal issues facing his tech colleagues. Most recently, Microsoft said it supports an Australian law that, if passed, would force companies like Google and Facebook to share revenue with news publications whose articles appear on their platforms. Google's threatened to shutter its search engine in Australia if the law is passed.

"The code reasonably attempts to address the bargaining power imbalance between digital platforms and Australian news businesses," Smith said in a statement Wednesday. "While Microsoft is not subject to the legislation currently pending, we'd be willing to live by these rules if the government designates us."

Though antitrust was certainly one of the more pressing topics Microsoft discussed during its media roundtable, the software maker also discussed social media and other political issues as well.

On TikTok

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For a while, it was starting to look like Microsoft might buy upstart social media darling TikTok. But the deal fell through.

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When Microsoft said last year it was interested in buying the popular upstart social media app TikTok, many tech watchers were confused. Microsoft makes business software like Office and Teams, and video games for its Xbox business. Even its LinkedIn social media network, which Microsoft bought for more than $26 billion in 2016, is focused on the professional world. It didn't have much experience managing a social media network popular with teenagers.

Nadella said he saw an opportunity to run a social network under his company's tenets of protecting privacy, ensuring internet safety and stopping disinformation. And with TikTok still growing quickly, he believes those values can make a difference early on.

"One of the things that we have recognized is context. LinkedIn, for example, has a very powerful context, and we use that. We made calls where we sort of said, oh, there is an editorial context that we bring to bear, even, to manage and shape the conversation," Nadella said. "The key thing there, for me, is don't wait for your property to scale."

On President Joe Biden

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Microsoft says the Biden administration has put capable people in key cybersecurity and national security roles.

Graphic by Pixabay/Illustration by CNET

Microsoft, like many tech companies, was caught in a tough spot during President Donald Trump's administration. On one hand, the government is sometimes an important customer. On the other, the companies spoke out against the president's Muslim bans, the policy of separating families at the border and the crackdowns on H-1B visas.

By comparison, Smith said that things appear as though they'll be less contentious with President Joe Biden's team. But that isn't just because of policy, Smith said. "I just think you're seeing the Biden administration quickly put a number of really capable cybersecurity and national security experts in key roles," he said. "They are focused on this issue and public-private collaboration."

Cybersecurity continues to be one of the most pressing national security and privacy issues facing tech today. In December, researchers discovered hackers had inserted malicious code into network monitoring software from SolarWinds. That company's products are used by state and federal agencies in the US, as well as many companies across the globe, including Microsoft. The attacks so far have been attributed to Russian and Chinese hackers.

Smith said many companies and governments still aren't protected enough from cyberattacks, nor are they connected to the internet in ways that they can easily detect attacks.

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"That's the No. 1 thing where we've got to do more work to help those organizations and those governments identify whether they're still being the subject of this attack," he said.

Which is why Smith added that he feels better that the Biden administration is putting cybersecurity and national security experts into key roles.

"At this point, a couple of months into it, I would say that we are probably feeling better about where the US government is, because the government has been acting to address" cybersecurity issues, he added.