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Microsoft’s President Says U.S.-China Divisions Risk Tech ‘Cold War’

Dina Bass

(Bloomberg) -- Microsoft Corp. gets just 1.8% of its global sales from China, even though the country accounts for about 18% of the world’s population, Microsoft President and Chief Legal Officer Brad Smith said, noting that tensions between the two largest economies risk creating a technology “cold war.”

“The Chinese market is not and has never been fully open to U.S. companies,” Smith said Wednesday at the U.S. China Series conference in Seattle. That’s not the only reason American companies have failed to deliver success in China, he said -- U.S. firms also haven’t recognized the differing tastes and needs of Chinese customers.

An increase in restrictions on what can be seen online in China, the so-called Great Firewall of China, also means that there isn’t a single global internet, and if there ever was, it ended five to eight years ago, Smith said. Tensions with China are bipartisan and won’t be changed by the next U.S. presidential election, leading to questions as to whether the two countries are heading to a technology cold war, he said.

Smith related a recent conversation with a former senior administration official, whom he didn’t name. The Microsoft executive said he asked about the likelihood of a tech cold war. “‘I think we’re already in one,’” Smith said the former official replied.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack

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