How Microsoft Became Washington’s Favorite Tech Giant

Author: Editors Desk Source: WSJ:

April 2, 2022 at 06:50

President Brad Smith has taken an amicable role with regulators. Rivals say he also directs negative attention toward them. Microsoft’s Activision deal, under FTC review, will test the strategy.

When a congressional committee was preparing to publicly interrogate the CEOs of four tech giants in 2020, MicrosoftCorp. President Brad Smith, whose employer wasn’t on the hot seat, gave the lawmakers a private briefing. When Australia proposed a law to force Facebook and Google to pay for news articles, Mr. Smith endorsed it and offered Microsoft’s Bing as an alternative. When the U.S. considered similar legislation, he went to Washington to testify in front of Congress to show his support.

Mr. Smith, a Microsoft veteran of almost 30 years and president for seven, has maneuvered his company to an enviable position in a regulatory environment that is increasingly hostile toward tech titans. Once an antitrust pariah itself, Microsoft is now widely seen by regulators as the friendly party among today’s top tech companies, a status government officials and Microsoft insiders say flows largely from Mr. Smith’s cultivation of friends in Washington.

Rivals say he is also skilled at directing negative attention toward competitors—to Microsoft’s benefit.

Brad Smith, president of Microsoft, at the Redmond, Wash., campus in March. PHOTO: GRANT HINDSLEY FOR THE WALL STREET JOURNAL — Brad Smith, president of Microsoft, at the Redmond, Wash., campus in March.PHOTO: GRANT HINDSLEY FOR THE WALL STREET JOURNAL

The 63-year-old’s influence is being tested as the company tries to smooth the way for its largest-ever acquisition, a $75 billion purchase of Activision Blizzard Inc. While regulators have yet to approve the deal, lawmakers and industry representatives say it is hard to imagine any of the other four biggest U.S. tech companies—Apple Inc., Amazon.com Inc., Google parent Alphabet Inc., or Facebook owner Meta Platforms Inc.—being in a position to even attempt to win approval for an acquisition of that size in the current environment.

“If this was any of the other four regular suspects, the blowback would be much greater,” said Sen. Mark Warner (D., Va.).

Mr. Smith’s strategy has been to cooperate with regulators who often have Microsoft’s rivals in the crosshairs. He has criticized Apple’s operation of its App Store—as Microsoft tries to bring its “Netflix for gaming” service to the iPhone. He has supported measures to cut into Facebook and Google’s dominance of digital advertising—which could benefit Microsoft’s search and digital-ad businesses. His support of tech-sector regulations has cut against efforts by Amazon, Microsoft’s fierce rival in cloud computing, to fight constraints on its business practices.