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.

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“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.

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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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DealBook Briefing: Behind Silicon Valley’s Big Cyberwarfare Pledge


Elsewhere in tech: Tesla halted production of its Model 3 to work out kinks. Netflix reported its strongest subscriber growth since going public. Investors are considering dropping Facebook from their FAANG bets, while a federal judge gave a photo-scanning lawsuit against the company class-action status. Amazon Business is reportedly holding off on selling drugs to hospitals. Coinbase is buying the paid inbox service Earn.com. And TaskRabbit has gone offline to investigate a possible hack.

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Today’s DealBook Briefing was written by Michael J. de la Merced and Amie Tsang in London.

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Lluis Gene/Agence France-Presse — Getty Images

The U.S.-China fight has pushed deeper into tech

Trump administration officials said that moving to block China’s ZTE from using U.S. components wasn’t a trade-related decision. But it’s hard not to see as the latest salvo in Washington’s fight with Beijing, particularly over technology. (Another Chinese tech giant, Huawei, is scaling back its U.S. presence.)

China’s trade deficit with the U.S. is widening. But China offered an olive branch today by loosening regulations for foreign makers of electric vehicles.

On currency concerns: The Treasury Department chose not to label China as a currency manipulator. President Trump disagreed: “Russia and China are playing the Currency Devaluation game.” The truth is more complicated.

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Sean Hannity

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Saul Loeb/Agence France-Presse — Getty Images

What was Michael Cohen doing for Sean Hannity?

Now that Mr. Hannity has been revealed as a legal client of Mr. Cohen’s, the media world has wondered what Fox News star wanted from the lawyer used by President Trump and the disgraced Republican donor Elliott Broidy.

Mr. Hannity has denied paying Mr. Cohen legal fees and asserted that none of their talks involved a matter involving him and a third-party — i.e., a settlement. (The talks, he said, were brief and about real estate.)

More eye-catching is the Fox News host’s contention that he might have slipped Mr. Cohen a few bucks for attorney-client privilege, which appears to be right out of “Breaking Bad.” (And legally erroneous.)

The political flyaround

• President Trump has nominated Richard Clarida, an economist specializing in monetary policy, as the Fed’s vice chairman. (NYT)

• Republicans want to run on tax cuts, but most Americans — including President Trump — seem uninterested. (NYT)

• The White House has ruled out further sanctions against Russia for its role in Syria, contradicting the ambassador to the U.N., Nikki Haley. (WaPo)

• James Comey’s book tour, with its attacks on President Trump, may damage his nonpartisan credentials, and has irritated Hillary Clinton supporters.

• The E.P.A. broke rules when buying Scott Pruitt’s $43,000 secure phone booth, a congressional watchdog found, while the Interior Department’s inspector general criticized Ryan Zinke for a $12,375 chartered flight. (WSJ)

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Nick Brown and Natalie Massenet of Imaginary Ventures.

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Tom Jamieson for The New York Times

Net-a-Porter founder’s next act: venture capital

Natalie Massenet had planned to largely retire after leaving the online luxury retailer. Instead, she has teamed up with the venture capitalist Nick Brown to form Imaginary Ventures, which recently raised $75 million to invest in direct-to-consumer start-ups.

More from Michael:

Ms. Massenet and Mr. Brown are counting on Ms. Massenet’s Net-a-Porter experience and contacts to help Imaginary Ventures stand out. The firm has already invested in companies like Glossier and Everlane, an upstart clothing brand.

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Daniel Leal-Olivas/Agence France-Presse — Getty Images

The deals flyaround

• 21st Century Fox’s general counsel, Gerson Zweifach, argued in an FT op-ed that his company deserves a quick decision on its bid for the British broadcaster Sky. (FT)

• Volkswagen is considering buying the rest of Navistar, the truck maker where it has a 17 percent stake. (WSJ)

• SoftBank and Apollo Global Management are each said to be pursuing a takeover of the newspaper publisher Tronc. Gadfly says that SoftBank isn’t being nice to bondholders.

• Carl Icahn has effectively gotten out of casinos by selling Tropicana Entertainment for $1.85 billion. He has also put up candidates to replace SandRidge Energy’s board.

• Big activist investors, including Bill Ackman and Nelson Peltz, lost money in the first quarter; smaller rivals did better. (Reuters)

• Marriott Vacations Worldwide is said to be in talks to merge with another timeshare services provider, ILG. (Reuters)

• In telecoms, Bouygues is said to be in talks with potential partners like CVC Capital about bidding for Altice’s France unit. (Bloomberg)

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Reporters and editors at The New York Times on Monday.

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Hiroko Masuike/The New York Times

#MeToo takes center stage at the Pulitzers

The NYT and The New Yorker shared the most prestigious Pulitzer Prize, that for public service, for their work on covering the harassment scandals in business, politics and the arts. What began with the NYT’s exposé of Bill O’Reilly’s settlements over sexual harassment allegations exploded with the two publications’ investigations into Harvey Weinstein.

Here’s the full list of prizewinners.

Elsewhere in workplace news: At an NYT event, female U.S. senators recounted the challenges they have faced. And the investment firm Legal & General said that it plans to vote against the chairs of British companies if less than a quarter of their boards are women. And Nike’s head of diversity has stepped down.

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Stephen Brashear/Getty Images

Steve Ballmer’s ‘shareholder meeting’ for the U.S. is today

When the former Microsoft chief set up USAFacts, he described its main project to Andrew as a 10-K for the U.S. government. Today, Mr. Ballmer will present its findings at what USAFacts says is a sort of annual meeting for taxpayers.

Mr. Ballmer said of the latest report, “Public companies owe this level of transparency to shareholders; I think citizens, as America’s shareholders, deserve the same.”

Watch the livestreamed meeting today at 1 p.m. E.T.

Everytown lays out gun-control principles for investors

As more financial firms move to pressure gun makers and sellers into self-regulation, the advocacy group (backed by Mike Bloomberg) plans to ask them to press for more policy positions and operational changes.

Among them: Requiring background checks for all gun sales; more funding for the Bureau of Alcohol, Tobacco and Firearms; having gun makers require sellers to adopt a code of conduct; and adopting smart-gun tech.

Revolving door

• Kirkland & Ellis has poached two more lawyers from Cravath, Swaine & Moore: the litigators Sandra Goldstein and Stefan Atkinson. (Kirkland)

Ben Frost, Morgan Stanley’s co-head of consumer and retail investment banking, is said to have left the firm and begun talks about joining Goldman Sachs. (Reuters)

• Lululemon named P.J. Guido as its new chief financial officer. It’s still looking for a C.E.O. (Bloomberg)

• The head of Cantor Fitzgerald’s broker-dealer unit, Shawn Matthews, is leaving to start a hedge fund. (Bloomberg)

The speed read

• The banking heir Matthew Mellon, from the Mellon and Drexel families of Bank of New York Mellon and Drexel Burnham Lambert, died at 54. And David Edgerton, a founder of Burger King, died on April 3 in Miami at 90.

• Eastern Europe’s fast-growing economies have severe labor shortages, and growing numbers of robots. (NYT)

• Steve Wynn has settled a long-running lawsuit over a dissolved shareholders’ agreement with his ex-wife, Elaine Wynn. (WSJ)

• The S.E.C. is investigating Guggenheim Partners over the purchases of three California mansions and loans to a now-bankrupt retailer. (FT)

• Larry Fink is finally a billionaire. (Bloomberg)

• Robert Mercer gave up his police badge in Lake Arthur, N.M., but he’s now volunteering for Sheriff Chad Day of Yuma County, Colo. (Bloomberg)

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