♪ >> is known as the ambassador of silicon valley, speaking to congress and the white house on issues that matter to the tech community, such as privacy, regulation, or the $10 million pentagon contract that microsoft just one. having spent 26 years working at microsoft alongside bill gates, steve ballmer, brad smith had a front row seat to some of the company's biggest milestones. he is now focused on spreading the message beyond microsoft with a new book, tools and weapons.

i'm tom giles in for emily chang. joining me today on bloomberg "studio 1.0." is brad smith, president of microsoft. tom: brad, thanks for being with us today. a lot of the last year has been spent talking about and spilling ink over this complex relationship between the u.s. and china. i'd like to hear more about your concerns of the way this is playing out with china and what impact that could have on u.s. technological leadership on a global arena. brad: the u.s. is the technology leader in the world today, but one of the important things for all of us to remember is that we don't actually invent or create technology by ourselves. if you buy american technology product, a product that is made by an american company, in all

probability, it consists of inventions that came from silicon valley as well as beijing and dublin and london, toronto and melbourne and the like. we need to continue that. if we were to try to construct a new digital iron curtain down the middle of the pacific, in all probability, we would hold ourselves back rather than hold someone else back. we need to keep that in mind. tom: what happens when there is theft of intellectual property? brad: we will in all probability have a new and ration of technology control laws in the united states. but they will need to work differently from the way they worked in the past. in sensitive areas, technology that could have more important military uses, for example, you are still dealing with technology that may have important civilian uses as well. we will need a regulatory regime

that focuses on how the technology is being used, who the users are. only by doing that can we protect national security while promoting economic competitiveness. tom: part of your discussion focuses on the different ways u.s. consumers and chinese consumers use technology, and you have some interesting and colorful examples. brad: it goes to the multifaceted nature of the u.s. -chinese technology relationship. on the one hand, there are frustrations american companies have about a lack of market access. i think those are legitimate frustrations, as we described. at the same time, we shouldn't overlook the fact that there are times when chinese consumers -- i think you can look at the challenges a company like amazon or google has had in china, and part of it, at least, relates to formidable local competitors that moved in some ways in a different direction to meet the

pace of chinese users. tom: there's a lot of looking at the rise of chinese populism, areas where leaders are playing on xenophobia. what gives you hope that in an era like that, we can achieve the kinds of cooperation that are going to be needed to achieve these changes? brad: the thing that gives me hope, as we describe here, are the shoots coming out of the ground, the progress we are making in certain areas. cybersecurity is certainly one of them. we champion this as a company. we believe that we have to bring thele together to protect cybersecurity of countries around the world, to protect our democracies from cyberattacks. tom: i want to bring things a little closer to home. we are in an area where we are seeing increasing activism on the part of tech employees, who for many years, traditionally, not always, have really kind of gone along with the vision of the leaders and the

entrepreneurs who got these companies off the ground. aztec gets bigger and becomes involved in more areas of the world and society, selling technology to governments and militaries, we are seeing the tech industry and employees of the tech industry really start to voice their concerns more vocally, and you have encountered it at microsoft as well. brad: what we found is the first thing we need to do is really engage with employees. we need to listen to them and understand their concerns. one of the things we found is even when we conclude that employees not have the right answers, they are often asking the right questions. and if we sit down and actually push ourselves a little bit harder to understand their concerns and think about those questions, we are able to develop a principal path. i do think you need a principal path. for example, we have said on an

issue like selling technology to the u.s. military, we believe that is important for us to do. we want the people who defend our country to know that we have their back. but we are also going to use our voice as a corporate citizen to address the new issues around something like the ethics and human rights locations of artificial intelligence and weapons. it is a journey, it's not something that is one and done in month or a quarter. but i think it is part of a new relationship with employees and a lot of good can come from a deeper relationship. it brought the spirit of innovation and a growth mindset to the company and our product development and engineering. you see this renaissance of renovation. ♪

tom: you grew up in the midwest.

your father was an engineer at wisconsin bell. your mother was a schoolteacher for a while. how did your upbringing influence the trajectory of your career and the choices you made that led to where you are now? med: my parents instilled in and ethic that said don't go talk about yourself, ask of the about themselves. you are going to come away learning a lot more. and as we think about the issues that we face in the world of technology today, i think what we need to do is learn more and listen more, and sometimes heavy talk less. tom: you went to law school at columbia, undergrad at princeton where you met your wife. we are in a period when there is a lot of rethinking of the role of higher education, of cost, for example. i would love to hear from you about the ways that your experience as an undergrad and in law school shaped your view of the world.

brad: i had a wonderful atortunity to learn myself places like princeton and columbia. how really big and diverse the world is. it left me with a profound commitment to the importance of education beyond high school. theeed to equip people with fields of tomorrow, computer science, data science, a multidisciplinary approach to issues around the ethics of artificial intelligence. we need to create more opportunities for people to go education,d to their because that's what they are going to need on an ongoing basis as technology continues to change the economy and changes jobs. tom: one of your early jobs, i understand there was a condition that you wrote into your contract. brad: in hindsight, i look back and laugh at myself and am slightly amazed that i did what i did. there was one law firm that i

wanted to work at, i got the offer from that law firm and then i turned around and said thank you very much, but i won't come work with you at your firm unless she will give me a personal computer. this was 1986. people looked at me a little bit quizzically. why do you want a pc? we have secretaries that do these things. i have a software program i loved, it was called microsoft word, version 1.0. if i can have that on my desk, and thankfully, the firm's management committee, it took them to do it, said i could come work there and have my own pc. tom: i want to hear little more about how you went from that firm to microsoft. brad: i was a longer first in washington and i was in the new london office and spent four

years there. 1993 when a point in the chief international council at microsoft came to me and said we would like you to move from london to paris and take a job at the company and lead our european legal and corporate affairs team. i thought about it and went back and said, no thank you. he told me, you don't get it. we're not asking you to come to microsoft just to work on the things we are doing now. we want you to come to microsoft and help us identify the things that we are not doing, but we should. and be in a position to help take us there. and i thought about it, that is pretty cool. that's what brought me to microsoft. that is what has kept me at microsoft for 26 years. tom: your role has evolved quite a bit from 1993, when you were in the legal department, to where you are now president. i think of your work alongside

triumvirate. how has your role evolved and how do you work together? brad: it has been fantastic. amy had just become the cfo before that. ya brought the spirit of innovation and a real growth mindset to the entire part of the company and perhaps most especially our product renaissance of renovation. part of what it takes to be a tech company in the world today, because you have to navigate the world. amy and i have offices just down the hall with carpet that is well-worn between us. amy worries about the macroeconomics of the world and i worry about the geopolitics of the world, and together with satya, we try to come together together.ecisions

that's a key aspect of what it takes to be successful as a tech company and to be innovative. you need to have people who are not just thinking broadly but can act decisively. that is certainly what we strive to do. tom: good leadership requires more than just a handful of people who can quickly come to decisions. you want healthy disagreement. can you give me an example or an anecdote of where it wasn't easy to come to a consensus on a shift change, a policy decision? brad: first of all, i think your point is of fundamental importance. the issues of technology, of business, of the world, or complicated. if everybody comes quickly to a single view, there is a really good chance that you are going to miss the nuances and you are going to make a mistake. in short, almost every issue that we deal with has healthy

discussion and debate, and that is fantastic. we had to decide in august of 2018 whether we were going to be more public in our concerns about cyberattacks on american politicians coming from russia. we decided that we would speak more clearly, and we did. but the thought process, the discussion process, it was not without really good, healthy debate. is a new team in the white house, we have the new president of the united states, our philosophy is to partner where we can and stand apart when we should. ♪

the i want to look ahead to future. transitioning on the theme of immigration, that's one of the areas where you have articulated

have put you at odds with the current occupant of the white house. we really seek to provide a candid perspective of what we have gone through as a company on aggressive issues like immigration. the first thing i would say is we have a philosophy, a set of principles, that remains constant. whenever there is a new team in the white house, we have a new president of the united states, our philosophy is to partner where we can come and stand apart when we should. and we work together with the obama white house on many issues, and yet we sued the united states government, not once, but four times, over the surveillance and privacy issues that were surfacing in the wake of the snowden disclosures. we've had the opportunity to work with president trump in the trump white house on important initiatives around issues like cybersecurity.

we have brought a lawsuit, together with princeton university and a princeton student to address the issues that are facing the dreamers. we have employees that benefit from the daca legislation whose ability to stay in the united states is impacted by the executive order that changed that. but i will say the other thing we really seem to do, regardless of who is in government in this country or in any other, is to focus on the issues, address the substance, be respectful of in someand not engage of the more dramatic name-calling that i think will take us backward rather than move us forward. as a company, we need to be a force for constructive dialogue and progress. that is the kind of philosophical tenets around which we remain steadfast. of: we are on the cusp

another election. as you look at the field of candidates for 2020, are there any who are articulating what you believe to be a sensible way forward for the technology industry? brad: one of the reasons we wrote this book is we in fact believe there is an opportunity not just for people who are running for office, but for all of us as citizens to dig a bit more broadly and deeply about the technology issues of our time. i think there's a lot of room for us to be fraud in our perspective. technology is changing the world, but it is not reaching everyone in this country.

need to ground ourselves in the data. we need a more forward-looking strategy. hope we will see one or more candidates embrace this, because it deserves to be a real mission for the united states. tom: microsoft was a real trail blazer, even if he didn't want to be, in terms of navigating the u.s. government that really try to break up what it saw as a monopoly or monopolistic tendencies. we are on the cusp of, or the early stages, i would argue, of another big wave of regulatory scrutiny and crackdown on the technology industry. what are the takeaways from your experience in the antitrust battle with the u.s. government that you think are relevant to the facebooks and googles of the world who find themselves on the receiving end of a great deal of government i right now? brad: it is so important to understand the concerns that people have. the problems that they want to see solved. it is so easy in the world of technology to be so excited about yourself and your own product that you can sort of lose touch with the concerns

that others may have about you. we learned in some ways the hard way about the importance of getting out and listing and connecting, and then working to solve problems. but i think we also learned that nobody ever dies of humility. if you can move forward with the spirit of listening, you can then address the issues, whether it is privacy or security or something else. but it all starts with a willingness to step back and look a new and to look at yourself with a little more perspective then you had before. tom: you spent more than two decades at microsoft. you really helped shape and usher in a new era of engagement , and as billrnment gates talks about in his introduction, what is left to do their for you? brad: there is always more work to do.

the first thing i would say is i have been in or mostly fortunate to work on very important issues with a number of great people as part of a great team. but let's just think about the issues that matter to the future. when i started working at microsoft 26 years ago, technology was still a niche. today it is ubiquitous. what the world needs is tech companies and people in government who can work together to solve the problems that are going to define our generation of people. we are on the cusp of bringing to life machines with artificial intelligence that, for the first time in human history, will have the capability to make decisions that previously were only made by people. as a generation, we better get that right, because if we fail, every generation that follows is going to pay the price for our shortcomings. upevery day, i actually get

with not only the opportunity to work with what i regard as some of the most wonderful people you can find anywhere, but an opportunity to contribute to some of the greatest challenges of our time. hope have a lot of work, i , i can continue to do. tom: there is a lot of work that needs to be done at other companies right now. we talked about facebook. alex stamos has said you should be ceo of facebook. does that not appeal, a challenge like that? brad: i am working at the right company, in the right job, for the person i would rather work for than anybody in this industry. there is no other place i would want to be. i don't want to take anything away from anybody else or any other company, but i am exactly where i want to be. the the idea of working in

government for you could push for the enactment of the policies that you outlined in your book, that doesn't appeal? brad: no, for a very particular reason. one of the things that we get to do is work with governments around the world on a sustained basis. one of the things i have learned from my years at microsoft is if you actually want to have an impact and you want to measure yourself, not by your title or your job, but what you actually contribute to and help accomplish, you got to be prepared to take something on and stick with it. you've got to have a long-term vision. that's what we are working to do at microsoft, where we think about these issues of trust and security and privacy and the like. i feel that i am at a place, and it's not just me, obviously, but a group of people is able to contribute in a very particular and constructive way. that's what i want to keep doing. tom: brad smith, microsoft

president, thank you so much for joining us today on bloomberg "studio 1.0." brad: thank you. ♪

>> it is almost 11:00 in singapore. we are coming to you live. we will have an exclusive with the former r.b.i. governor. morning session here in hong kong. this is a look at ups. -- at our top story. a trade deal will not be signed in the u.s. asia and europe are under consideration. top philippine mobile operator rise.has seen revenue we are going to be hearing from the ceo. or a burden?

the case, for and against of lower negative rates. this is bloomberg markets. going straight to the markets, we have just had china go on its lunch break. bit of a relief rally taking place. see the nikkei above earnings. 30 or 40 companies coming out with their numbers. in hong kong, three tens of 1% lower. some of the negativity coming through as we do