ACOZO.COM: Not your father's Microsoft

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June 11, 2019

The old Milton Friedman saw about corporate social responsibility, that the only obligation of business is to use its resources to “engage in activities designed to increase profits so long as it stays within the rules of the game,” has been thoroughly discredited. It is widely believed today that enlightened businesses ought to do good for multiple stakeholders as they endeavor to do well.

Still, the businesses that best pull off this multi-faceted feat are the ones who keep focused on why their good works help the business—and not merely from the positive sheen of giving away money.

Microsoft, for example, decided to invest nearly $500 million from its own balance sheet to boost affordable housing in its home region. As Brad Smith explained to an audience Monday evening at Fortune's CEO Initiative annual meeting in lower Manhattan, the tech giant favored investments rather than grants for being more effective. Its efforts, while well-meaning, also are literally self-serving: Microsoft understands that the many non-Microsoft members of the community who serve its employees need to find a reasonably priced place to live. Achieving housing affordability is a win-win.

Smith also explained why Microsoft supported higher taxes on businesses in Washington state to fund post-secondary education. It lobbied successfully for legislation that generally raised taxes on businesses, but raised them the most for the two most valuable companies in the state, Microsoft and Amazon. (He implied that Amazon needed some convincing but ultimately supported the measure enthusiastically.)

Microsoft is taking a thoughtful approach to artificial intelligence and facial recognition too. Smith says it persuaded the state of California not to pursue a contract that would result in biased results and that Microsoft turned down a commercial opportunity with an unnamed “authoritarian regime.”

It's an amusing turnabout that a company no one would have considered a warm and cuddly corporate citizen 20 years ago—Smith didn't dispute my somewhat differently worded assertion to this effect—has become such a thoughtful civic and global policy leader.

Microsoft makes a lot of money too.

Adam Lashinsky

@adamlashinsky

adam_lashinsky@fortune.com

NEWSWORTHY

City slickers. Springing off Adam's essay: Microsoft is going to have a new neighbor in Washington state as Salesforce plunks down its second headquarters in Seattle, a result of its $15.7 billion all-stock acquisition of Tableau. No doubt the company will benefit from its rival's investments in the local community. Meanwhile, Google is setting up shop in Santa Cruz , one of the few places the search giant didn't have a presence, after its $2.6 billion acquisition of Looker.

It's good to be king. Amazon is the world's most valuable brand, according to a new ranking compiled by Kantar, a research agency owned by advertising giant WPP. The value of Amazon's brand rose 52% to $315.5 billion this year, the study determined. This is the first time in 12 years that Apple ($309.5 billion) Google ($309 billion) have not come out on top.

To the sky. United Technologies Corp. is planning to merge with Raytheon to create Raytheon Technologies Corp., a business that is poised to become the world's second biggest aerospace defense firm next to Boeing. Greg Hayes, UTC's CEO, is set to take the helm while Tom Kennedy, CEO of Raytheon, is teed up for two years as executive chair. The Wall Street Journal warns that "efficiency gains are a leap and the deal is messy," comparing it to the DowDuPont's merger-spin.

Take off your shoes. Intel is scooping up a small networking chipmaker, Barefoot Networks, in a bid to help it compete with rival chip giant Broadcomm. The terms of the deal, which is expected to close in the third quarter of the year, were not disclosed. The startup had been backed by a host of blue chip firms, including Google, Alibaba, Tencent, and Goldman Sachs.

Sorry, not sorry. Susan Wojcicki, CEO of Google's YouTube, apologized to the LGBTQ community for its handling of a fracas involving Steven Crowder, a conservative pundit who has made hateful comments on his YouTube channel. Wojcicki, speaking at Recode's Code Conference in Scottsdale, Ariz., said "I know that the decisions we made was very hurtful to the LGBTQ community and that wasn't our intention at all....We were really sorry about that." Wojcicki stood by her company's decision to keep Crowder's channel up while demonetizing it.

Over the borderline. An unnamed subcontractor for U.S. Customs and Border Protection suffered a "malicious cyberattack" that has compromised photos of travelers and license plate images in a biometric data system, the agency disclosed on Monday. Fewer than 100,000 people are believed to have been affected by the breach, BuzzFeed News reported, citing an unnamed law enforcement official. There is speculation that the incident may involve Perceptics, a Tenessee-based firm, which was reportedly ransacked by a hacker in May.

ON THE MOVE

Cloudera's chief executive officer Tom Reilly is retiring, as is Cloudera cofounder and chief strategy officer Mike Olson. Reilly had taken Cloudera public in 2017 and later merged it with former rival Hortonworks. Martin Cole, a former Accenture executive, has been named Cloudera's interim CEO...Uber CEO Dara Khosrowshahi will assume more responsibilities upon the departure of Barney Harford, the company's chief operating officer, and Rebecca Messina, its chief marketing officer. Vice Media has cancelled its HBO show "Vice News Tonight" and the executive who oversaw that operation, Josh Tyrangiel, is leaving the company...Softbank Group has just made a number of hires, including Chris Cooper, former chief financial and compliance officer of Sequoia Capital, as chief financial officer of Softbank Group International (SBGI). Lane Bess, former chief operating officer of Zscaler and ex-CEO of Palo Alto Networks, is joining Panorays , a cybersecurity firm, as an investor and advisor. Deepa Subramaniam is joining the ACLU as its first chief product and digital officer after a stint as VP of product at Kickstarter.

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FOOD FOR THOUGHT

What's in store for Hon Hai, also known as Foxconn Technology Group, the world's largest contract manufacturer of electronics? Over 15 years, the company has built itself into a behemoth, steering and benefiting from the forces of globalization. But Foxconn lately finds itself flailing at the center of a Sino-American trade conflict even as the rise of A.I.-powered devices, such as so-called smart speakers, threatens its core smartphone-assembly business. Below the Financial Times begins to ponder what's at stake.

This Tuesday will be a historic day for Foxconn, when it will host an investor conference for the first time ever. On the agenda at the event in the Taipei suburb of Tucheng, which translates as Dirt City, is the looming existential challenges for a company which is both the world's largest assembler of Apple iPhones and China's biggest private sector employer.

The immediate order of business is to explain how the company will be run after Terry Gou, the tycoon who founded it 45 years ago, steps down as chairman to enter politics and run for the Taiwanese presidency.

ACOZO.COM

Tuesday, June 11, 2019

Not your father's Microsoft

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