US and China need to repair tech ties: Microsoft President

Washington and Beijing must try to improve their relationship and address issues around technology exchanges, Microsoft President Brad Smith said on Thursday during an online media session held by the company.

Smith, who leads various businesses, legal, and corporate affairs team of the U.S.-based software and cloud service giant, described the current U.S.-China relationship as “the world’s most important bilateral technology relationship, and certainly the world’s most complicated bilateral technology relationship.”

Referring to the tech dispute between the two nations, Smith said: “We are going to need to see China and the United States take new steps to establish a clear relationship when it comes to the governance of technology.”

The U.S. and China have been embroiled in a trade war, a dispute over Huawei Technology’s role in America, and U.S. claims of Chinese stealing trade secrets.

Joining the session from Washington D.C., Smith stressed that both countries need a technology relationship that provides “greater clarity and more stability.” He stated that he held a meeting with China’s Minister for Industry and Information Technology Xiao Yaqing a week ago, and will also be advocating for steps toward reconciliation in the U.S. capital this week.

He stressed that in particular, the two governments need to clarify how each country will manage exports and imports of technologies. He said: “For any technology company, whether it’s Microsoft or a company in China or from any other country that wants to do business in a manner that impacts this relationship, I think that the need for specificity is present.”

Smith said that China only accounts for “under 2%” of Microsoft’s global business, and that percentage had been declining over the last few years. Despite that, he said: “There are many important roles that we can, and should play in China,” pointing to Microsoft’s Windows business and Azure cloud computing services.

Smith also addressed the issue of the power that tech companies now possess on account of the vast amounts of data and market share that they have amassed and harnessed. “Whenever you have a force that is so ubiquitous, that is so impactful, that in the eyes of some can become more powerful than the government or a country itself, you have to expect that governments will reassert their sovereignty,” he said.

“It’s fascinating to compare the major capitals like Brussels and Beijing and Washington D.C., and, in fact, see that the agenda is very similar as it is, as well in Canberra, and in New Delhi, and Tokyo and Seoul,” he said. “This is a decade that will bring regulation to the technology.”

Smith said that tech companies, including Microsoft, “need to assume a new level of self-responsibility, and adapt to a future where we recognize that regulation is not only inevitable but, in fact, has an important role to play.”

While Microsoft fought a vigorous antitrust battle with the U.S. government in the 1990s and early 2000s over the use of the dominance of its Windows operating system to push the bundled browser software, regulators worldwide have now turned their attention to primarily scrutinizing the behavior of the four Big Tech — Google, Amazon, Apple and Facebook.

Smith claimed that Microsoft had learned from past experience to “heed the words, listen to the concerns, and address the problems that are on people’s minds.”

However, he criticized Google for giving itself the role of “ultimate gatekeeper,” claiming that “you cannot get an app onto a phone without going through an app store.”

Microsoft, in recent years, has been shifting its core business to cloud-based computing services, and its fast-growing Azure platform holds a number two global market share behind Amazon’s AWS.

Asked if he is concerned that regulators might start delving into the cloud market, Smith said: “There is not only vigorous competition between three large companies [Microsoft,, and Google], as well as others, but that is the market you don’t see the same gatekeeper.”

Author: Akito Tanaka, Nikkei Asia

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