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Microsoft president: Cambridge Analytica was 'the Three Mile Island for the tech sector'

Akiko Fujita

As the longest serving executive at Microsoft (MSFT), President and Chief Legal Officer Brad Smith knows a thing or two about the scrutiny that comes with being a global tech company.

Now, with state attorneys general launching two multi-state antitrust investigations into tech giants Google (GOOG, GOOGL) and Facebook (FB), Microsoft’s president says he is seeing “genuine cultural change” like the one his own company experienced two decades ago. Back in 1998, the Justice Department and 20 attorneys general targeted Microsoft in an antitrust suit that eventually settled in 2001.

“I don’t know at the end of the day whether it matters whether (the scrutiny) is warranted. It’s there,” Smith said, in an interview this week with Yahoo Finance’s The Ticker. “What we learned from our experience in the ‘90s was...we had to look in the mirror and get to the point where we could see what other people saw in us and begin to understand why they thought the concerns were justified.”

MILAN, ITALY - FEBRUARY 13:  Brad Smith Microsoft’s President and Chief Legal Officer attends the 'Artificial Intelligence And Digital Skills' conference at Politecnico University on February 13, 2019 in Milan, Italy. Brad Smith, Microsoft’s President and Chief Legal Officer, speaks today in front of the young students of the Politecnico and also some high schools during a conference on the enormous prospects that can be obtained by mixing artificial intelligence and the ingenuity of man.  (Photo by Pier Marco Tacca/Getty Images)
Brad Smith, Microsoft's President and Chief Legal Officer attends the 'Artificial Intelligence And Digital Skills' conference at Politecnico University on February 13, 2019 in Milan, Italy. (Photo by Pier Marco Tacca/Getty Images)

Smith and his co-author, Carol Ann Browne, explore the impetus for this most recent techlash and the biggest challenges facing the technology sector, in his new book “Tools and Weapons: The Promise and the Peril of the Digital Age.”

They point to two inflection points: Whistleblower Edward Snowden’s revelations of the National Security Agency’s PRISM surveillance program, and the Cambridge Analytica scandal, which exposed the private data of Facebook users to boost the chances of then-presidential candidate Donald Trump.

“Cambridge Analytica was sort of the Three Mile Island, if you will for the tech sector,” he said, referring to the nuclear disaster that led to a partial meltdown at a Pennsylvania nuclear facility. “Finally, there was this event and people said ‘okay, now we’re going to think differently about data and privacy. And we just have to come to terms with it.”

‘We’ve got to be transparent about our principles’

Smith’s book comes as tech companies that emerged on the back of Microsoft’s antitrust case face a regulatory reckoning. Just this week, state attorneys general from 48 states, Puerto Rico, and the District of Columbia joined forces to launch an antitrust investigation into Google’s dominance in advertising. That followed a separate antitrust investigation into Facebook, launched by New York Attorney General Letitia James and her counterparts in seven other states and the District of Columbia.

While Microsoft has remained relatively unscathed from the backlash against tech so far, it hasn’t been immune from criticism — especially from its own employees. Last year, the company was forced to respond to outrage over its contract with the Department of Homeland Security’s Immigration and Customs Enforcement (ICE), after allegations the agency was using Microsoft’s facial recognition technology to separate families at the U.S.-Mexico border. Smith says while the company provided email and Microsoft Office to ICE, it never green lighted the use of facial recognition technology, and chose not to terminate the contract out of concern “some other company might step in” and facilitate the “harmful use” of the technology.

“We think as a principle, it makes more sense for companies to be accountable to governments than for governments to be subject to the decisions of unelected companies,” he said.

Still, Smith says the company has refused to provide facial recognition for use by a police force in California and a government overseas out of concern the technology would lead to bias, discrimination, and mass surveillance.

“I do fundamentally believe that we have to have a broader set of principles than just seeking every opportunity to make money. We’ve got to be transparent about our principles,” he said.

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter at @AkikoFujita

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