Microsoft Tries a New Role: Moral Leader

But while the company’s power has diminished since a couple of decades ago, when it controlled computing through Windows, Microsoft remains an influential voice. On Monday, its market capitalization of $733 billion made it the third most valuable technology company, behind Apple and Amazon and ahead of Google parent company, Alphabet, and Facebook.

“The irony for Microsoft is that they lost in search, they lost in social networks and they lost in mobile, and as a consequence, they have avoided the recent pushback from governments and media,” said David Yoffie, a professor at the Harvard Business School. “This has given Microsoft the freedom to take the high road as the ethical leader in technology.”

Since taking the reins at Microsoft in 2014, Mr. Nadella has brought a more sensitive style of leadership to the company than his two predecessors, Steve Ballmer and Bill Gates. That shift has proved to be more suitable for Microsoft in this era.

Two decades ago, Microsoft was depicted as a bully that ran roughshod over competitors in a landmark antitrust suit brought by the federal government, followed by similar cases brought by the European Union and private companies. Mr. Smith was brought in to make peace in Microsoft’s antitrust battles, and Mr. Nadella was the company’s first chief executive to start in the job since those suits were settled.


“We need to ask ourselves not only what computers can do but what computers should do,” Satya Nadella, Microsoft’s chief executive, said on Monday at the company’s developer conference in Seattle.

Kyle Johnson for The New York Times

In a phone interview, Mr. Smith, who is also Microsoft’s chief legal officer, called its legal problems in past decades a “gut-wrenching experience” that had shaped Microsoft in its current form. “It made Microsoft a better and more responsible company,” he said.

This year, Microsoft published a book that outlined some of the harmful effects that could come from artificial intelligence, such as bias in job recruiting. It has litigated four lawsuits against the United States government over the past five years in efforts to defend customers’ privacy rights. One of them, a fight over law enforcement access to data stored in an overseas Microsoft data center, went to the Supreme Court, which dropped the case after Congress enacted a law that mooted it.

“Not only did Microsoft learn from its mistakes, Satya is a unique and caring individual,” said Tim O’Reilly, a tech industry publisher and conference organizer. “He understands deeply that Microsoft must help others to succeed.”

The closest analog among Mr. Nadella’s peers is Tim D. Cook, the chief executive of Apple, who has painted Apple as a staunch defender of its customers’ privacy. He has jabbed at Facebook and Google, both advertising-supported businesses that profit from the personal data they collect from their users, a contrast to Apple’s business model of selling devices.

Facebook and Google, which owns YouTube, have defended their advertising businesses for allowing them to deliver services for free. They’ve promised to add more human moderators and invest in software tools that can screen out misinformation and other prohibited content.

Mr. Cook has not turned his ire toward Microsoft, which gets most of its revenue from software, hardware and cloud computing services. The company has investments in internet services that are supported in part by advertising, including its Bing search engine and LinkedIn, the social network for professionals it acquired in 2016.

Mr. Nadella has been more hesitant than Mr. Cook to publicly criticize other technology companies, turning to more subtle types of persuasion. A low-key leader, Mr. Nadella peppers his speeches and interviews with references to literature, warning that careless creators of technology could contribute to a dystopian world of George Orwell’s “1984” or Aldous Huxley’s “Brave New World.” His lieutenant, Mr. Smith, has become a ubiquitous ambassador for Microsoft on the big social issues facing technology in Washington, in Brussels and on the conference circuit.

Microsoft is still occasionally cast in the role of villain. A California man who sold recycled electronic waste recently pleaded guilty for creating thousands of unauthorized discs that helped people restore the Windows operating system on refurbished PCs. The recycler, who has been sentenced to 15 months in prison, has said Microsoft supported the case against him, which was brought by federal prosecutors, because he threatened part of its business. Microsoft published a long blog post that portrayed his actions unfavorably.

Still, the Microsoft of 2018 is a long way from the company that was once portrayed as a corporate predator.

“Microsoft lived through negativity that these companies are experiencing now, and it doesn’t want to go back to those days,” said Vivek Wadhwa, a distinguished fellow with Carnegie Mellon University’s Silicon Valley campus.

Mr. Smith of Microsoft said the greater scrutiny on the tech sector would not always fall on the same companies.

“At any given moment, there may be one or two companies in the spotlight,” he said. “I don’t think one should assume the same one or two are always going to be in the spotlight or always on the defensive.”

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The Week Ahead: Tech Companies Report Earnings and Economic Growth Data Is Released


An Amazon warehouse in Florence, N.J. Amazon, a frequent target of President Trump, is one of several big tech companies that will report earnings this week.

Bryan Anselm for The New York Times

Here’s what to expect in the week ahead:


Some of biggest tech companies report earnings.

Five of the best known companies in technology will report their earnings this week, including Twitter, Microsoft and Alphabet, the parent company of Google. Two of the tech giants that will share their financial results have been under political assault, but for very different reasons. Facebook has come under scrutiny by Congress and regulators for its data practices and role in the spread of misinformation, while Amazon has become a punching bag for President Trump, who has attacked it for not collecting enough taxes and its relationship with the United States Postal Service. It’s not clear whether the financial results of either company were affected, but the attacks have nonetheless spooked investors in the past. Nick Wingfield

British panel hears testimony on Cambridge Analytica.

The researcher at the center of the Cambridge Analytica scandal will testify on Tuesday before a British panel investigating fake news and the use of social media in the weeks before the country voted to leave the European Union. The University of Cambridge researcher, Aleksandr Kogan, has been accused of improperly gathering personal data on millions of Facebook’s users and sharing the information with the voter-targeting firm Cambridge Analytica. On Thursday, the same panel, the Digital, Culture, Media and Sport Select Committee, will hear from Mike Schroepfer, Facebook’s chief technology officer. Mr. Schroepfer can expect to hear about the frustration of committee members who have wanted Facebook’s chief executive, Mark Zuckerberg, to testify rather than lower-ranking executives. The committee has little legislative authority, but is working on a much-anticipated report that aims to shed light on the ways that political campaigns have manipulated social media to win over voters. Adam Satariano


European leaders will discuss trade with Trump.

President Emmanuel Macron of France and his wife, Brigitte, will arrive in Washington early this week for a state visit, and they will be followed closely by Chancellor Angela Merkel of Germany on Friday. Their discussions with Mr. Trump are likely to center on global security concerns but also on his administration’s aggressive trade agenda, as an important trade deadline looms. On May 1, the exemptions that the United States granted several countries from steel and aluminum tariffs are set to expire, meaning the European Union and other close allies would to pay a steep premium to send metal into the United States. The Trump administration is hoping to use the tariffs as leverage in a trade negotiation, but European leaders have said they would not be bullied into concessions. Ana Swanson


Detroit automakers report earnings.

The three Detroit automakers all report first-quarter earnings this week, and most of the attention will focus on the struggling Ford Motor, which replaced its chief executive a year ago. Ford brought in Jim Hackett last May to reinvigorate earnings, cut costs and sharpen its strategy, but after 11 months on the job he’s offered few specifics on a turnaround plan. At least some details on cost-cutting are expected when Ford reports on Wednesday. General Motors and Fiat Chrysler Automobiles both present their results on Thursday, and are expected to show solid performances, thanks to sales of high-margin trucks and sport-utility vehicles. Neal E. Boudette


Stimulus is on the European Central Bank’s agenda.

Have signs of a slowdown in Europe pushed back the European Central Bank’s timetable for ending its emergency stimulus measures? That will most likely be the chief question when Mario Draghi, the central bank’s president, holds a news conference on Thursday after a meeting of the bank’s Governing Council. The central bank is not expected to make any changes to its monetary policy at the meeting. But it will probably discuss whether a downturn in some economic indicators signals a slowdown or is just the result of one-time factors, including an especially brutal flu season that kept many workers off the job. Jack Ewing


Deutsche Bank’s C.E.O. makes his debut on earnings call.

Christian Sewing, the new chief executive of Deutsche Bank, Germany’s largest lender, will take part in its first-quarter earnings report on Thursday. Mr. Sewing (pronounced “saving”), who was named to replace John Cryan this month amid chronic losses at the bank, will face investors and analysts in an early morning conference call. They will most likely interrogate Mr. Sewing about the bank’s strategy, which some investors complain is amorphous and unconvincing. Jack Ewing

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Silicon Valley Warms to Trump After a Chilly Start

Yet quietly, the tech industry has warmed to the White House, especially as companies including Alphabet, Apple and Intel have benefited from the Trump administration’s policies.

Those include lowering corporate taxes, encouraging development of new wireless technology like 5G and, so far, ignoring calls to break up the tech giants. Mr. Trump’s tougher stance on China may also help ward off industry rivals, with the president squashing a hostile bid to acquire the chip maker Qualcomm this month. And Mr. Trump let die an Obama-era rule that required many tech start-ups to give some workers more overtime pay.

Mr. Trump “has been great for business and really, really good for tech,” said Gary Shapiro, who leads the Consumer Technology Association, the largest American tech trade group, with more than 2,200 members including Apple, Google, Amazon and Facebook.

Mr. Shapiro said that he had voted for Hillary Clinton, Mr. Trump’s opponent, in 2016, but that he and many tech executives had come around on Mr. Trump. While they disagree with him on immigration and the environment, they have found areas where their interests align, like deregulation and investment in internet infrastructure.


Mr. Trump has praised Apple for saying it would build new plants in the United States. But the company, whose new Silicon Valley headquarters are shown here, has no such plans.

Jim Wilson/The New York Times

“This isn’t Hitler or Mussolini here,” Mr. Shapiro said. And even though the president’s new tariffs on steel and aluminum could hurt American businesses and consumers, “disagreement in one area does not mean we cannot work together in others,” Mr. Shapiro said. “Everyone who is married knows that.”

Mr. Trump himself has taken to naming tech companies he says are on his side.

After Apple took advantage of the new tax law in January to bring back most of the $252 billion cash hoard that it had parked overseas, the company said it would make a $350 billion “contribution to the U.S. economy” over the next five years. That prompted Mr. Trump to suggest he had made good on a campaign pledge to get Apple to bring jobs back to the United States.

“You know, for $350 million, you could build a beautiful plant. But for $350 billion, they’re going to build a lot of plants,” the president told members of Congress last month. Mr. Trump said he had called Timothy D. Cook, Apple’s chief executive, to personally thank him.

In fact, Apple has no plans to build a plant in the United States. The company is uneasy with Mr. Trump’s invoking it to signify how his policies are working, according to a person close to Apple who was not authorized to speak publicly. Apple has not, however, publicly corrected the president.

Mr. Trump has also stayed quiet on the controversy engulfing Facebook over user privacy, while other politicians have called for more regulations after revelations that the British political consulting firm Cambridge Analytica improperly harvested the information of 50 million Facebook users. Cambridge Analytica used that data to aid Mr. Trump’s campaign.

Michael Kratsios, the White House’s deputy chief technology officer, said in an interview that while Mr. Trump and Silicon Valley had their differences, “in places where we do see eye to eye, I think we’re achieving extraordinary success.”

Dean Garfield, head of the Information Technology Industry Council, a 102-year-old advocacy group that represents the biggest tech firms, said his members walked a tightrope, supporting and opposing the president on different issues. Lately, he said, “we have reached balance in the tightrope.”

The equilibrium marks a turnabout from what had been a testy relationship between Mr. Trump and the tech sector. On the campaign trail in 2016, Mr. Trump was so critical of tech companies that Jeff Bezos, Amazon’s chief executive, once joked he might send Mr. Trump to space in a rocket.

Some tech executives have since disagreed with Mr. Trump on social issues. Mr. Cook emailed staff last June to say he had unsuccessfully lobbied the president to remain in the Paris climate accords. In November, Microsoft sued the administration to protect a law that blocks deportation of young undocumented immigrants known as Dreamers. More than 100 companies, including Google, Facebook and Uber, filed a brief supporting California’s lawsuit on that issue.

Even so, tech executives worked to build a relationship with the president, with some meeting him at Trump Tower before his inauguration and again at the White House in June. While in Washington for the second meeting, Mr. Cook and Satya Nadella, Microsoft’s chief executive, also dined with Jared Kushner, the president’s senior adviser and son-in-law, and Ivanka Trump at the couple’s Washington home, according to a person briefed on the meeting who wasn’t authorized to speak publicly about it. This month, Treasury Secretary Steven Mnuchin visited Apple’s headquarters.

Silicon Valley has found plenty to like about the Trump presidency. In September, tech giants including Facebook and Microsoft teamed up with the administration to pledge $500 million to computer science education. Amazon, Microsoft and Google are also eyeing the administration as a potential customer as Mr. Trump pushes to modernize the government’s digital infrastructure.


Mr. Cook, right, and the venture capitalist Peter Thiel met with Mr. Trump in December 2016. “In places where we do see eye to eye, I think we’re achieving extraordinary success,” said Michael Kratsios, the White House’s deputy chief technology officer.

Shannon Stapleton/Reuters

But Silicon Valley’s favorite thing about Mr. Trump is almost certainly his new tax code. Many tech companies lobbied for corporate tax reform for years before Mr. Trump signed the new tax bill.

Tech giants immediately reaped the benefits. Under the new rules, Apple saved $43.7 billion in taxes, according to the Institute on Taxation and Economic Policy, a nonpartisan tax research group. Apple then announced the $350 billion “contribution” to the American economy over five years.

Most of the tally was previously planned spending with American suppliers and a $38 billion tax payment on its overseas cash. But Apple also said it planned to hire 20,000 new workers, invest in new data centers and another domestic campus, and increase a fund for innovative American manufacturers to $5 billion from $1 billion. It also gave employees $2,500 bonuses.

The president was quick to tweet the news.

The shifting relationship between Silicon Valley and Mr. Trump appears to have upset some tech employees. A Facebook page called “Angry Googler,” with nearly 1,000 followers, has been dedicated to criticizing Google for any sign it was cooperating with the president.

“Not happy about Google pulling a 180 and jumping into bed with Trump? Same here,” said the “About” section of the page, which suggests it is run by a Google employee. This month, the page posted an article about Google helping the Defense Department analyze drone footage. “We’ve gone from organizing the world’s information to … optimizing weapons of war,” the page said.

Messages to the account were not returned. Google declined to comment.

Some tech firms remain discomfited about appearing as the president’s allies. Last month, Rob Goldman, Facebook’s vice president of advertising, played down Russia’s impact on the 2016 election after the Justice Department charged 13 Russians with trying to subvert its outcome, including by using Facebook. Mr. Trump retweeted Mr. Goldman approvingly.

Facebook was uncomfortable with that association with the president, said a person close to the company who was not authorized to speak publicly.

Two days later, Facebook’s policy chief, Joel Kaplan, distanced the company from Mr. Goldman’s comments.

“The special counsel has issued its indictments, and nothing we found contradicts their conclusions,” he said in a statement. “Any suggestion otherwise is wrong.”

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Waymo, a Google Spinoff, Ramps Up Its Driverless-Car Effort


John Krafcik, chief executive of Waymo, at the Detroit auto show in January. The company plans to introduce a driverless ride service over the next two years.

Brett Carlsen for The New York Times

Waymo, the autonomous-car company spun out of Google, announced a new alliance on Tuesday that would vastly expand its effort to ramp up a driverless ride service over the next two years.

The company said it planned to buy as many as 20,000 electric cars from Jaguar Land Rover and outfit them with the radars, cameras and sensors it has developed to enable the vehicles to drive themselves on public roads.

The cars will be used in a ride-hailing service that Waymo plans start in Phoenix by the end of this year and then roll out in other cities across the United States, John Krafcik, Waymo’s chief executive, said in a statement issued in conjunction with an event at the New York International Auto Show.

Eventually, the company said, it hopes to provide a million rides a day.

The announcement comes about a week after an autonomous vehicle operated by the ride-hailing service Uber struck and killed a pedestrian crossing a street in Tempe, Ariz., at night. The accident involved a Volvo XC90 sport utility vehicle that Uber had outfitted with radar, cameras and other sensors and computer gear to enable it to navigate without input from a driver.

Although a safety driver was in the Uber vehicle at the time, it was in autonomous mode when it struck and killed Elaine Herzberg, 49, on March 18. It is believed to be first pedestrian death associated with a self-driving car.

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Computer Chip Visionaries Win Turing Award

Today, more than 99 percent of all new chips use the RISC architecture, according to the association.

“This is the one fundamental idea that has been sustained over the last several decades of chip design,” said Dave Ditzel, a chip industry veteran who studied with Mr. Patterson at Berkeley. Mr. Ditzel helped popularize many of the same ideas and is now building a new RISC chip at a start-up called Esperanto.


Google has developed new chips that were specifically designed for artificial intelligence applications.


Mr. Patterson and Mr. Hennessy were interested in simpler chips because they ran faster, consumed less power, made life easier for chip designers and allowed machines to evolve at a faster rate. In the mid-1980s, new RISC chips emerged from two Silicon Valley start-ups, Sun Microsystems and MIPS Technologies, becoming the standard for the computer workstations and servers that underpinned big corporate operations.

Those processors were eventually eclipsed by chips from Intel, which put its considerable muscle behind a competing design. But as computing expanded into smartphones, tablets, and other small devices — where power and space are at a premium — more and more chips used designs from a British company called ARM, short for Advanced RISC Machine.

As a book written by the two researchers in 1989, Computer Architecture: A Quantitative Approach, became the standard text for chip design, even Intel took a partial step toward the RISC idea. Its chips continued to use their own complex way of talking to a computer’s software, but started to use some aspects of RISC.

Intel chips still drive the data centers that power the internet. But as these chips approach their physical limits, internet giants like Google, Facebook, and Amazon are pushing tasks onto a wide range of simpler processors that consume much less power, sparking a renaissance in chip design.

“Complexity is even more of an enemy than it was before,” Mr. Ditzel said. “We have to design differently.”

Mr. Patterson and Mr. Hennessy are at the heart of this change. Their book is now in its sixth edition. Mr. Hennessy is on the board of directors of Google’s parent company, Alphabet, after serving as the president of Stanford for 16 years. And Mr. Patterson works in the Google research lab that is designing low-powered chips specifically for artificial intelligence.

As time goes on, the world could move even more toward the RISC way of doing things, thanks to an organization called the RISC-V Foundation, which has published a chip architecture that anyone can use for free, said industry veteran Dennis Allison. The organization was founded by Dave Patterson and others from Berkeley.

“I expect this to play a vital role in the future,” Mr. Patterson said. “And the architecture is not that different from what John and I described back in 1980.”

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Daily Report: More Earnings, Earnings, Earnings



We are now getting to the newsiest part of the tech earnings cycle.

Yes, last week provided more than enough such news, with Apple reporting its slowest-ever growth in iPhone sales, Facebook posting another prodigious quarter, Microsoft showing its cloud-computing chops, and Amazon merely strolling away with the holiday shopping season. But this week is set to be even newsier, and there are two reasons: Alphabet and Yahoo.

For Alphabet, the company formerly known as Google, Monday’s earnings report will bring the first-ever view of how all the different entities within what is now a holding company are actually performing. That would include the online advertising behemoth Google, as well the smart-devices maker Nest and the highly secretive research division X. If Wall Street likes what Alphabet discloses, it may soon pass Apple as the world’s most valuable company.

To prep for Alphabet’s report, we recommend reading this illuminating profile on Larry Page, Alphabet’s chief executive, and how he has turned the company into a reflection of his personal fascinations.

Then there’s Yahoo, which has not typically reported must-watch earnings. But on Tuesday, Marissa Mayer, Yahoo’s chief executive, is expected to give more details about a complicated plan to spin off the online portal’s core business. It probably won’t be pretty, with the prospect of layoffs looming over the company as part of the plan. Ms. Mayer will be facing a lot of doubters and critics, so what she says will be especially scrutinized and dissected.

For a sense of the high stakes for Ms. Mayer, we recommend reading this portrait of employee morale at Yahoo.

Daily Report: Alphabet Eclipses Apple to Become the Most Valuable Company



For most of the past four years, Apple has reigned supreme as the world’s most valuable company. Now there’s a new holder of the crown: Alphabet.

Alphabet, formerly known as Google, reported strong quarterly results on Monday that propelled its stock upwards in after-hours trading. Based on that lift, Alphabet exceeded Apple in market capitalization when the stock began trading on Tuesday morning. Each company is worth more than $500 billion.

Alphabet investors were particularly happy, writes Conor Dougherty, because the company revealed the financials of its different businesses — including its Verily health-care subsidiary and its Nest smart devices unit — for the first time, separating them out from the core Google business. That gave a clearer picture of Google’s ad business — and the picture was very strong indeed.

Apple, in contrast, is entering a period of slower growth. Last month, the company reported a less than 1 percent rise in quarterly iPhone sales, the lowest increase ever and a far cry from the double-digit gains that investors had grown accustomed to.

Tuesday is set to bring Yahoo’s quarterly earnings, which may send its stock on a very different trajectory than Alphabet’s. Marissa Mayer, Yahoo’s chief executive, is under pressure to give details of her plan to spin off the company’s core business. Adding to Ms. Mayer’s woes, a former Yahoo manager on Monday sued the company for using an employee-ranking system that he alleged was discriminatory and a violation of federal and California laws governing mass layoffs.

Pentagon Wants Silicon Valley’s Help on A.I.

But those relations have soured in recent years — at least with the rank and file of some better-known companies. In 2013, documents leaked by the former defense contractor Edward J. Snowden revealed the breadth of spying on Americans by intelligence services, including monitoring the users of several large internet companies.


Robert O. Work, right, at a 2014 news conference led by Chuck Hagel, the defense secretary at the time. Mr. Work, who was the deputy secretary of defense, said of the global race for A.I. technology: “This is a Sputnik moment.”

Chip Somodevilla/Getty Images

Two years ago, that antagonism grew worse after the F.B.I. demanded that Apple create special software to help it gain access to a locked iPhone that had belonged to a gunman involved in a mass shooting in San Bernardino, Calif.

“In the wake of Edward Snowden, there has been a lot of concern over what it would mean for Silicon Valley companies to work with the national security community,” said Gregory Allen, an adjunct fellow with the Center for a New American Security. “These companies are — understandably — very cautious about these relationships.”

The Pentagon needs help on A.I. from Silicon Valley because that’s where the talent is. The tech industry’s biggest companies have been hoarding A.I. expertise, sometimes offering multimillion-dollar pay packages that the government could never hope to match.

Mr. Work was the driving force behind the creation of Project Maven, the Defense Department’s sweeping effort to embrace artificial intelligence. His new task force will include Terah Lyons, the executive director of the Partnership on AI, an industry group that includes many of Silicon Valley’s biggest companies.

Mr. Work will lead the 18-member task force with Andrew Moore, the dean of computer science at Carnegie Mellon University. Mr. Moore has warned that too much of the country’s computer science talent is going to work at America’s largest internet companies.

With tech companies gobbling up all that talent, who will train the next generation of A.I. experts? Who will lead government efforts?

“Even if the U.S. does have the best A.I. companies, it is not clear they are going to be involved in national security in a substantive way,” Mr. Allen said.


An Air Force team transporting missiles to be loaded onto drones at the Persian Gulf base in 2016.

John Moore/Getty Images

Google illustrates the challenges that big internet companies face in working more closely with the Pentagon. Google’s former executive chairman, Eric Schmidt, who is still a member of the board of directors of its parent company, Alphabet, also leads the Defense Innovation Board, a federal advisory committee that recommends closer collaboration with industry on A.I. technologies.

Last week, two news outlets revealed that the Defense Department had been working with Google in developing A.I. technology that can analyze aerial footage captured by flying drones. The effort was part of Project Maven, led by Mr. Work. Some employees were angered that the company was contributing to military work.

Google runs two of the best A.I. research labs in the world — Google Brain in California and DeepMind in London.

Top researchers inside both Google A.I. labs have expressed concern over the use of A.I. by the military. When Google acquired DeepMind, the company agreed to set up an internal board that would help ensure that the lab’s technology was used in an ethical way. And one of the lab’s founders, Demis Hassabis, has explicitly said its A.I. would not be used for military purposes.

Google acknowledged in a statement that the military use of A.I. “raises valid concerns” and said it was working on policies around the use of its so-called machine learning technologies.

Among A.I. researchers and other technologists, there is widespread fear that today’s machine learning techniques could put too much power in dangerous hands. A recent report from prominent labs and think tanks in both the United States and Britain detailed the risks, including problems with weapons and surveillance equipment.

Google said it was working with the Defense Department to build technology for “non-offensive uses only.” And Mr. Work said the government explored many technologies that did not involve “lethal force.” But it is unclear where Google and other top internet companies will draw the line.

“This is a conversation we have to have,” Mr. Work said.

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