70 Business The EconomistSeptember 14th 2019
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s microsoft adigital nation and does it have a secretary of state?
The answer of Brad Smith, the software giant’s top lawyer, is,
well, diplomatic. Nation states are run by governments and firms
need to be accountable to them, he says. But yes, he admits, he
worries a lot about geopolitics these days.
Large companies have forever lobbied governments around the
world—think Big Pharma or the oil majors. Sometimes the ties
with their home countries’ diplomacy are very close indeed: in
2017 the former boss of ExxonMobil, Rex Tillerson, became Presi-
dent Donald Trump’s first secretary of state (albeit a short-lived
one with a decidedly mixed record). And in a globalised world,
multinationals can benefit from a “corporate foreign policy”, a
term coined by Stephanie Hare and Timothy Fort in a paper from
2011, to align their values and priorities across markets.
Nowhere does this ring truer than in Big Tech. Digital giants
loom larger than analogue ones (Facebook has 2.4bn monthly us-
ers—two-thirds more than China has people). They upend one in-
dustry after another and penetrate every nook and cranny of soci-
ety. They lord it over cyberspace and set many of its rules. Recog-
nising this, some countries are planning to upgrade their San
Francisco consulates into de facto tech embassies. Denmark was
the first to send an envoy to Silicon Valley, in 2017. The European
Union is considering opening a mission in the capital of tech.
The tech firms, too, are adapting—none more so than Micro-
soft. Mr Smith presides over an operation as big as the foreign of-
fice of a medium-sized country. Its 1,500 employees work in de-
partments like “Law Enforcement and National Security” or
“Digital Diplomacy Group”. It has outposts in 56 countries, sending
regular cables to headquarters in Redmond, near Seattle. Mr Smith
is as itinerant as a foreign minister. In one year he visited 22 coun-
tries and met representatives of 40 governments.
Microsoft, however, differs from much of Big Tech in its ap-
proach. Most firms are, like corporations before them, students of
realpolitik. Apple censors apps in China when the Communist
Party tells it to. Facebook dithered when the Burmese army used
the social network to spread misinformation and fuel violence
against the Rohingya. Google shelved a project to create a censored
Chinese search engine after an outcry from employees, but is re-opening an office in Egypt, a country run by a repressive junta.
Against this cynical backdrop Microsoft’s diplomatic efforts
look refreshingly principled. Its worldwide antitrust fight at the
turn of the century; Edward Snowden’s leaks which revealed wide-
spread surveillance by America’s spooks; the rise in state-spon-
sored cyber-attacks—such “inflection points”, says Mr Smith,
forced the company to mature geopolitically, long before its rivals
in the case of antitrust. In “Tools and Weapons”, a new book co-
written with Carol Ann Browne, a communications executive at
Microsoft, he defends multilateralism—global problems caused
by technology require global solutions, he says—and warns heads
of state and foreign ministers (whom he meets by the dozen) that
the tech cold war between America and China may split the world
in two camps, leaving everyone worse off. He advocates involving
non-governmental actors (including companies like his but also
civil society) in decision-making, even if this “multistakeholder”
process is slower than top-down government edicts.
It is not all idle talk, either. In 2013 Microsoft refused to hand
over emails that sat on a server in Ireland to America’s feds in a
drug-trafficking case, and successfully defended its decision in
court—setting political wheels in motion that led America’s Con-
gress to adopt a law allowing tech firms to challenge such warrants
if they fall foul of another country’s rules. It implemented changes
required by the eu’s tough new privacy law globally, helping the
rules become a worldwide standard for many companies—and in-
deed countries. In 2017 Mr Smith proposed a “Digital Geneva Con-
vention”, an international treaty to protect civilians against state-
sponsored cyber-attacks in times of peace. Last May he helped
launch the “Christchurch Call”, a pledge by 17 countries and eight
tech firms to “eliminate terrorist and violent extremist content on-
line”. Google and Facebook signed it. Apple (and America) did not.
Mr Smith says a coherent corporate foreign policy is simply
good business: it creates trust, which attracts customers. His doc-
trine indeed sits well with Microsoft’s business model, based on
sales of services and software. It can afford to be more of a purist on
privacy and the spread of disinformation, the most politically con-
tentious tech issues of the day, than giants whose profits come
from targeted advertising on social networks.
Microsoft is not squeaky-clean. Mr Smith says it refuses to put
data centres for Azure, its global computing cloud, in countries
with a sketchy human-rights record. Yet it has a few of them (oper-
ated by a local partner), plus a research centre, in China. And al-
though Microsoft has proposed sensible rules for the use of facial-
recognition technology, it has previously trained its algorithms on
pictures of celebrities without their knowledge.United States of Azure
A dose of hypocrisy is perhaps inevitable in an organisation the
size of Microsoft. Critics level a more fundamental charge against
its foreign policy, however. Where, they ask, does it—and fellow
tech giants—derive the legitimacy to be independent actors on the
international stage? This is the wrong question to pose. As busi-
nesses, they have every right to defend the interests of share-
holders, employees and customers. As global ones, their priorities
may differ from those of their home country’s elected officials.
And as entities which control much of the world’s digital infra-
structure, they should have a say in designing the international
norms which govern it. At a time when many governments refuse
to lead, why should the firms not be allowed to? Especially if, like
Microsoft’s, their efforts blend principles with pragmatism. 7Schumpeter The Redmond doctrine
Lessons from Microsoft’s corporate foreign policy