Brad Smith: Worldwide Partner Conference 2016

Remarks by Brad Smith, President and Chief Legal Officer, in Toronto, Canada, July 13, 2016.

GAVRIELLA SCHUSTER:  Welcome to Day Three of WPC.  (Cheers.)  I have had some amazing experiences over the last few days connecting and reconnecting with so many of you.  And I hope you can all say the same about your time here.  Meeting with partners all year long is one of the highlights of my job.  But WPC is really something special.  Don’t you think?  (Cheers, applause.)

For those of you who are back with us for a third, a fifth or even a tenth year, thank you for making WPC part of your annual plan.  And to our first time attendees, welcome.  I look forward to seeing you back again next year at WPC 2017 in Washington, D.C.  (Applause.)

So I’m going to do a little advertisement.  You can take advantage of the best price of the whole year by registering for WPC 2017 in the commons today.

We have some great Day Three keynotes lined up for you with Brad Smith, Toni Townes-Whitley, Steven Guggenheimer, and our new commercial leader Judson Althoff all taking the stage today.  And then we have a full day of amazing sessions and network opportunities followed by the partner celebration tonight with Icona Pop and Gwen Stefani right here on this stage.

So remember, if you don’t bring your WPC badge and your photo ID with you tonight, you will not be able to get into the partner celebration.  It’s high security.  No exceptions on this, not even for me.

So I hope you enjoy the lineup this morning, and I’ll be back in just a bit.


PHILLIP WERR:  I am Phillip Werr, chief marketing officer at COPA-DATA based in Salzburg, Austria.  (Applause.)  We are honored to be the 2016 Public Sector Microsoft CityNext Partner of the Year.  (Applause.)  I am most excited that together with Microsoft we have the chance to shape the future of smart factories, smart cities and industrial IoT.  We believe that the spirit and talent represented in this global partner community is stronger when we share experiences and partner together.

Now, ladies and gentlemen, it’s my pleasure to introduce Microsoft’s President and Chief Legal Officer Brad Smith.


BRAD SMITH:  Good morning.  First I want to tell you as somebody who was first trained in life to walk into a court room and stand before a judge, following Icona Pop and standing in front of all of you is not only rather different, it’s great.

You are the reason we have come to Toronto.  You are the force that is helping people and businesses and governments change the world on behalf of everybody at Microsoft, I want to say thank you for being here, thank you for what you’re doing.  We appreciate it.  (Applause.)

As we get together in this beautiful city I want to start today by talking a little bit about how the world is changing.  As you’ve heard this week we’re talking about the Fourth Industrial Revolution; a book in part that really framed this earlier this year when it was published by the World Economic Forum.  And I think it’s helpful to think a little bit about what that means.  We’ll help by what we can learn from the three industrial revolutions that preceded this one.

The first industrial revolution, it started in the 1760s and railroads and steamboats first brought people to Toronto.  It opened the Great Lakes up to navigation.  But more than anything else it changed human imagination forever, because for the first time people could realize that they could build a machine that would travel faster than a horse, the fastest mode of transportation literally for millennia.  But the world was just getting started.

The second industrial revolution kicked off in the latter 1800s, and there’s two photographs that capture something that I think speaks to us today, because it shows how quickly the world can change.  This first photograph was taken at an intersection in New York on Broadway in 1905 and if you look carefully you will see trolleys and horses and not a single automobile.  The day that photograph was taken 25 percent of all American agricultural produce was used to feed horses.  And yet look at this second photograph taken on the same intersection just 20 years later.  What you see are trolleys and automobiles and not a single horse.  That shows the kind of change we’re likely to see over the next two decades.

Of course, all of this continued with the third industrial revolution, an exercise that us and so many of you were part of as we changed productivity and how people connect and communicate.  All of this in some ways sets the stage for what is now coming, the fourth industrial revolution.  And it’s really going to be built, as the World Economic Forum recognized, around three big sets of technologies.  The first is advances in the physical world, from new forms of materials to autonomous vehicles and robotics and 3D printing and the like.  But it doesn’t stop there.  It will continue with the world of biology, with genomic testing and engineering, technologies that will change human health, but also agriculture and livestock.

And finally there’s advances in the digital world, the things we’re seeing every day, the Internet of Things, Bitcoin, new business models.  What is really interesting about every industrial revolution is that each one is fundamentally fueled by just one or two enabling inventions.  It was the steam engine and then it was the electrical power plant, and then it was the combustion engine and then it was the microprocessor.  The amazing thing about every single technology that you see on this slide is that it is all connected to and fueled by exactly the same thing, the cloud.

That is what puts us at the center of everything that is unfolding.  It’s why we at Microsoft spent over $7 billion in capital expenditures this past year to help build what we believe is rapidly becoming the world’s leading datacenter infrastructure, the fundamental infrastructure of the 21st Century.

As you heard from Scott Guthrie yesterday, already we have more than 100 datacenters in over 40 countries.  We have millions of servers and not only that we’re building out on our own and in partnership with others new fiber optic cables that literally are connecting the world.  This is the world’s new infrastructure.  It is the infrastructure of the 21st century.  It is what is going to open the door to a world of new possibilities.

And to help us see some of those possibilities there’s no one better than the person I want to ask to spend a few minutes up here with me, Toni Townes-Whitley, Microsoft’s Corporate Vice President who leads our public sector work around the world.

Toni, come on up here on stage.


TONI TOWNES-WHITLEY:  Thank you, Brad.

All right, I feel like I need to dance up here.  I don’t care.  But I do care.  I do care.  And let me tell you what I care about.  When Brad talks about this fourth industrial revolution it’s not only going to bring forward economic opportunity that’s connective tissue that he’s just talked about in this interconnected world is also going to bring about social models, social impact models and new engagement models that will benefit Microsoft and you in how we go to market and how we try to change the world.

Let me give you one example.  Almost a year ago in New York at the UN General Assembly in September 2015, 193 leaders from countries around the world agreed to address 17 of the most critical and impactful societal issues facing our world for the next 15 years.  I’m not sure if 193 leaders have agreed to very much over the last decade.  But this is what they agreed to:  Extreme poverty, to address that; climate change; gender equality; and as part of that agreement we agreed as Microsoft and we invite you as our partners to start to think about how to align the solutions and products and services that we make together to address these societal outcomes.

It’s very important that while there’s economic opportunity we are also fully aware of the societal impact that we need to address and our responsibility to do that.  In fact, when we think about there’s almost $2.1 trillion in economic opportunity that’s recently been quantified to address these solutions going forward.  So it’s a huge opportunity to do good things for the world, but also grow our businesses respectively.

Core to this digital transformation and core to the belief at Microsoft is that this partnership, in fact, can impact 7.4 billion people on the planet.  Now what’s underpinning that?  It’s important for you to be aware of the assets that are underpinning this digital transformation.  Brad gave us a few of them:  Analytics that are predictive and diagnostic; scalable platform; solutions that are secure and open; and even the devices, if you will, that are enterprise-grade, but they drive human mobility not device mobility.  Those are the assets.  And underpinning all of those are the important, probably the biggest currency is around data.  Data is being generated in huge quantities.  Data is borderless.  Data is powerful and data, if you’ll let me give you a few examples, is now tangibly changing the world.

So just three brief examples of how Microsoft with you around the world is changing with data and the digital assets of our cloud, meaningful, measureable, scalable impacts.  Let’s start in Spain with the Dravet Syndrome Foundation, which is a public ‑‑ excuse me, a nonprofit health organization that’s doing some of the most amazing genetics testing in the world.  They chose our Azure solution, scalable, open, and strong and robust.  Why?  Because they needed to store 40 terabytes of genetic data in the cloud, because they were able through the power of Azure to drive testing that normally takes years down to a month, so that patients who have been testing, and who have suffered through testing, gene-by-gene at a time, now hundreds of genes are tested through the power of Azure.

Let me also go to another part of the world.  April 15, April 2015, and later in May one of the most massive earthquakes that struck Nepal, the second one hit a month later.  It was here where we saw in some regions the entire village was flattened, 600,000 houses and other buildings destroyed, 9,000 lives.  What was the role of Microsoft and our partners?  Solution engineers through a cloud-based application started to work on debris management, started to employ even the very citizens who had been displaced, and allowed them through this solution to be able to get paid, to be able to work and rebuild their community.  That’s what the power of data and digital assets can do.

And finally let’s take us back for some of us to a local example, Tacoma, Washington.  There’s a high school there that we’ve been working with for a number of years, a high school with some of the worst dropout rates, with very low graduation rates.  And we looked at an Azure-based solution to start to look at predictive outcomes for students so that we could identify those students who were failing before that event occurred.

Teachers and administrators came together with our solution set and with Power BI and Office 365 to predict these outcomes.  And as a result you’re about to see the impact.  So as I get ready to roll this video I’m going to ask you to remember two numbers, 7,400, which is the approximate number of high schools in the United States, and 233 million, the number of students, high school students on the globe.  So when you see what happened in Tacoma imagine with us what scale looks like.

Let’s watch the video.

(Video segment, applause.)

BRAD SMITH:  There’s so much that technology can do, but if you thought this is only going to be a talk about all of the good things about technology and everything that’s right with the world, you came to the wrong keynote, because let’s face it, we live in a complex world and we live in a challenging time.  Just look at the headlines of the last couple of years:  Customers whose credit cards have been hacked; schools that are worrying about kids using the internet to engage in bullying; government officials in Europe expressing concerns about technology; the presidential candidates in the United States not just of one party, but of both, expressing skepticism, as well, skepticism that has even gone to the heart of the tech sector in Northern California.

We need to do more than advance the cloud.  We need to build a cloud for good.  And I want to talk a little bit about what I think that calls on us to do, really three things.  First, we have to ensure that we build a cloud that people can trust.  More than anything, we hear from people around the world that as they move their most important information to the cloud what they want is the confidence that the rights and protections they’ve so long enjoyed when their information was stored on paper will persist in this new technology era.

That’s why we’ve articulated principles that we’ll stand up for and apply in our business around security and privacy and compliance and transparency.  It’s why we’ve recognized that as we go forward we have an important responsibility to help keep people safe, a responsibility we’ve been exercising for many years with others, a responsibility that we needed to exercise in the past year, as I announced earlier this year we received 14 lawful orders from the police in Paris and Brussels, after last November’s terrorist attacks.  And we were able to verify that they were all lawful and we responded to all of them with an average turnaround time of less than 30 minutes.  That’s part of what it takes to keep people safe.

But we need to do more than that.  We need to stand up for transparency.  That’s why as a company we have brought not one but four lawsuits against our own government, the United States Government, starting three years ago to win the right that we pursued and achieved to share more information with the public.  It’s why we brought a new lawsuit just two months ago.  We looked at the search warrants that we had been receiving in the United States and we found that over 2,000 of them had a secrecy order that would prohibit us forever from letting customers know that the government had obtained their email.  We’ve gone to court to say that is not just unconstitutional, that’s not the future we want to build.  (Applause.)

We recognize that we need to stand up for people globally.  That’s why we’re litigating a case in the United States to argue that the U.S. government cannot reach customers’ email in our datacenters around the world.  It’s why we’re taking that message not just to court.  We’re bringing it to the public. We’re bringing it to Congress.  It’s why two months ago when I had the opportunity to participate in a House Judiciary Committee Hearing in Washington, D.C., I found it fascinating when the witness who was there from the Department of Justice had the opportunity to listen to this.

(Begin video segment.)

WITNESS:  The country of Ireland decides that, in fact, you committed a crime.  And they want yourself back there.  Should they be able to simply unilaterally go to an Irish Court, issue a warrant and come get you?

CONGRESSMAN:  So if the country of Ireland sends an extrajudicial request for me?

WITNESS:  No, no.  They just want to come haul your ass in.

CONGRESSMAN:  I would oppose that, sir.

WITNESS:  OK.  So in the tangible world, that’s an example where we have absolutely no authority whatsoever to take a person, by the way U.S. or otherwise, from another sovereign country.

Let’s just look at the intangible world, the piece of paper reduced to a PDF, because that’s really what we’re talking about.  We’re talking about something that could be tangible fairly quickly but happens to be in electronic format, correct?

CONGRESSMAN:  Certainly.

WITNESS:  OK.  And do you want us to assume that somehow as to U.S. corporations, Microsoft, Apple, whoever it happens to be that in my opinion is being bullied by the Justice Department today in some ways, you want us to believe that you should throw out all the history of extradition, all the history of you don’t get it, you get to ask another country for it, and you want to have an absolute right to demand it and get it if a U.S. court says it and you have jurisdiction over the entity who could control the bringing of it back electronically to you?  Is that correct?

(End video segment, applause.)

BRAD SMITH:  Unfortunately, that is absolutely correct.  That is what the U.S. government is arguing, and that is why we are arguing that is not good enough.  We need an internet that respects people’s rights.  We need an internet that is governed by law.  We need an internet that’s governed by good law.  (Applause.)  Thank you.

There’s one more thing we recognize: We need to practice what we preach.  It’s not enough for us to argue that the government should respect people’s privacy, we have to do a great job of respecting people’s privacy as well.  That’s why we’ve not only created more tools for you and our customers, it’s why we’ve articulated new principles that are applying across our services and throughout our business.  All of this is what it’s going to take to build a cloud that people trust.

But there’s more that we need to do as well.  That’s why the second thing we’re focused on is building a responsible cloud.  Responsibility means a lot of different things, but this morning I want to talk about one thing.  It means that we need to think about the environment.  Already the datacenters that Microsoft has built and is operating consumes more electrical power than a small state of the United States.  There will come a day in the future, whether it’s a decade or two from now, when Microsoft and Amazon and Google and Facebook and others, each of us, will consume more electrical power than a midsize country in Europe.  We have a responsibility to protect the environment.

And that’s what we’re doing.  (Applause.)  It’s why we announced, why I announced on behalf of the company two months ago, that we are taking a principled approach, we will be transparent with the world so people know what we’re doing and know what we’re consuming in terms of electricity.  We’ve said that we’ll focus our R&D on making our datacenters more efficient so they require less electricity.  And perhaps most importantly, we have said that each and every year we’re going to use more renewable energy than the year before.

As I announce here today in 2016, 44 percent of the electricity that’s consumed by our datacenters come from either solar, hydro or wind power.  But as I committed on behalf of the company, within two years we’ll pass the 50 percent threshold.  By early in the next decade, we’ll pass the 60 percent threshold.  And I’m here to tell you and tell you today that each year and every year we’re not going to stop.  We’re going to keep getting better.  There will come a day when I’ll be able to come, or someone else from Microsoft, and we’ll say, all of our energy in some future add, is coming from this kind of renewable energy.  That’s the kind of future we need to build.  (Applause.)

And then there’s one last thing that we should talk about this morning.  We need to build a cloud that’s inclusive.  This speaks, I believe, not only to one of the defining issues of this year, but quite possibly one of the defining issues of our time, because let’s face it there’s a lot of anxiety in the world.  In some ways it’s easy to understand why.  A hundred years ago in what are today many industrial countries, people moved from farms to cities where they built automobiles.  But today if you go into an automobile factory, you may see automobiles being built by machines.

There was a day six decades ago when every elevator had a job inside it.  Just think about how anachronistic that feels to us.  Will there be a day two or three decades from now when people will think that is equally anachronistic to look back and think that every taxi had a job inside it?  That’s quite possibly the future.

Where are the new jobs going to come from?  That’s what the world is asking.  Who is going to fill these jobs?  That’s what these taxi drivers in Vienna were asking when they protested the arrival of Uber.  We want technology to move forward, but we believe that timeless values need to endure.  And that will only happen if businesses think broadly.  That’s why your work and your role is so important.  We need to make sure that every business benefits, large and small, older and newer, so companies can grow and grow in ways that can create new jobs.

And we need to think not only about businesses but about people.  It needs to start with the next generation of people.  That’s why we’re focused on partnering with others to bring coding and computer science into schools around the world.  In the United Kingdom, in Malaysia, it’s why we’re creating and supporting partnerships that bring together universities in China and the United States, it’s why we’ve stood up with President Obama to speak in favor of getting computer science and coding into schools in the United States.

The U.S. is sort of representative of much of the world in this regard.  Did you know that in the United States there are over 37,000 high schools, but last year the number that offered the advanced placement course in computer science was only 4,310.  And when we think about the needs of diverse peoples, it’s even worse, because last year only 22 percent of the students in those courses were female, only 11 were African-American or Hispanic.  But we know that when we give young people these opportunities, they take advantage of them.  We know that a girl who studies computer science in secondary school is 10 times as likely to major in computer science in university.

And if there’s one thing we’ve learned as a global company working with people like you around the world it is this: Diversity is a strength.  What the world needs is not higher walls; what the world needs is broader bridges that will help everyone seize a better future, and that’s what we’re committed to pursuing.

That’s one of the reasons we’re so excited about our acquisition of LinkedIn and the opportunity it creates to help people find new online training to advance their education, but more than that it helps us help people connect with their next jobs.  It helps us help government to understand what jobs are being created and what skills need to be added in communities around the world.

And it’s not enough just to do that.  It’s why Satya Nadella at the World Economic Forum in January announced our program to ensure that the public cloud serves the public good.  It’s why we created Microsoft Philanthropies.  It’s why we’re working with groups around the world, like Right to Play, our charity partner this week, a group that’s headquartered in Toronto, a group that works in 18 countries around the world, a group that connects with a million kids every week so through play they stay in school, they learn more, and what we’re finding is we can use technology to make them and everybody better.

That’s part of what inspired us in January to announce that we will do what no other company has committed to do in our industry, donate over the next three years a billion dollars of cloud services to nonprofits around the world.  (Applause.)  And it’s why in two weeks in Redmond we’ll have over 800 of our employees engaged in a hackathon, working on over 150 projects to support nonprofits and other social causes.

We recognize that we have a mission to reach everyone in the world, not just people in rich countries, not just people in big cities, but everyone and everywhere.  I saw this last June when I was in Kenya, the little town called Nanyuki.  It’s about 100 kilometers north of Nairobi and only 12 percent of the people who live there even have electricity.  But what’s going on there is amazing, because I got to see this.

(Video segment, applause.)

I think this speaks not just only to our opportunity, but the importance of your role, because this requires not just technology innovation but business model innovation.  Think about what it took to provide a service that would only cost $3 a month.  I’ve found what that meant in fairly practical terms when I was at that cyber café and I met this fellow, a very bright 22 year old who takes his laptop and every day provides technical support to customers in Europe and North America for a U.S. startup.  Believe me, none of the people who are getting his great help had any idea that they were interacting with a very bright fellow who was in the middle of Kenya in a place where people don’t even have access to electricity.  But that’s the kind of opportunity we can create.

And it makes a world of difference.  I saw it with these students.  Students who one year after having their school connected to the internet had seen their average scores on the Kenya National Exam, a 5 point exam, rise from 2.8 to 3.8.  This technology can make a difference.

But finally there is one last group I want us to think about, as well.  There are over a billion people in the world who have some kind of disability, maybe a physical disability, maybe a form of mental illness, and the truth is we need to think about them.  Technology can change their lives for worse if we do a bad job, but for better if we do good work.  That’s why we’re working across Microsoft to engage our engineers.  It’s why we’re connecting with NGOs.  It’s why we’re taking our message and our new services to customers.  And if any of you for a moment doubt that this kind of work can have a concrete impact on people’s lives I ask you to think about just two words, watch this.

(Video segment, applause.)

When you’re back home a month from now, if you remember only one thing from this week I hope you’ll remember this.  A year ago when we last met there was a 10-year-old boy who could only read four words a minute and who told his teacher that he was stupid.  A year later he not only is a better reader, he has a brighter future.  He can read faster and he knows that he is smarter than he ever thought he was before.  That is our opportunity.  When we come together and we do our best work, we can do great work.  That is what the world needs.  It needs the best of us so that we can serve the world, so we can create a cloud that not only spans the planet, but is a cloud for good.

Thank you very much.