When I talked to Microsoft CEO Satya Nadella last week, I’d just finished Microsoft CTO Kevin Scott’s excellent book, Reprogramming the American Dream, about AI’s potential to include rural America in the future growth of the economy. Evenly distributing the goodness of technologies such as AI across geography and class lines might go a long way toward healing some of the resentment in less populous states for “the coastal elite” (including tech workers). I asked Nadella how this might happen, and whether big tech companies like his are obligated to make sure the wealth generated by AI benefits everyone. Along with answering my questions, he questioned whether “aggregator” companies (he didn’t name names, though Facebook leaped to my mind) may feel such an obligation.
Nadella’s quotes have been lightly edited for clarity.
Laying the groundwork
“We have to get the basics right. Let’s as a nation really make sure that broadband connectivity is distributed evenly. Let’s just make sure that the basics of education and healthcare are available. Then you can have the ingenuity of our system, where there’s entrepreneurial energy that’s more evenly distributed. What people like Steve Case (ex-AOL CEO and rural-startup investor) and others are doing to bring new sources of risk capital to those markets can be tapped into because there are people with skills and a dream, they can go on to create new jobs. They can revolutionize quote-unquote traditional industries.”
On consumer tech and growth
“You can talk about AI, just given all the breakthroughs in [natural-language] speech or breakthroughs in [computer] vision or whatever is the latest and greatest tech breakthrough. And then you can even talk about it in terms of its application in a very narrow way. If you look at even the last 10 years, I feel all of the progress in tech, the fact that it’s not showing up broadly in productivity stats, is because it’s being very narrowly used in the consumer sphere. Which is important, which is awesome, it creates surplus there and it’s great. But it’s not sufficient.
You’ve got to have at the core of your existence your sense of purpose and mission.”
“We at Microsoft, as a platform provider, say, ‘Look, let’s not just talk about the consumer-driven economy,’ which we realize is 70% of the economy. But in order to get back to 3%, 4%, or 5% growth, and, more importantly, growth that is more equitably distributed either geographically, rural, urban, or by sector, it can’t just be about consumer internet companies doing well. Every sector of the economy needs to do well, because the most malleable resource we have is AI, software, digital.”
“Having grown up in India and then come to the United States, sometimes when people in the U.S. talk about these problems, you look at it and say, ‘Wow, we have a lot of advantages!’ The fact the public school education is available broadly is a luxury of the developed world. But given this is the largest economy in the world, the richest country in the world, can we aspire for more? Absolutely. What are we getting wrong?
“So in some sense it’s not even about emphasizing STEM education. It’s about how we are nurturing the local school communities of teachers, school administrators, the parents, and the students. Sometimes I worry, especially coming from tech, that we think somehow we’re one technology solution away from some real change. I think it’s a broader societal compact of really saying ‘education matters; it’s a priority for our community.’ What about wage support for teachers? It might be that the biggest thing we should do in order to create great educational systems.”
On broadband and the digital divide
“You can’t, in the 2020s, think about what is being contemplated right now in the big infrastructure bill without thinking about broadband and really creating a level playing field for every American citizen. People live today in what is going to be an increasingly digital economy—in every part of the country—without broadband. To me you need it even to deliver the core services. Think about the COVID-19 crisis. In order for us to be able to triage patients who are in these remote areas, you need to deliver telemedicine, and telemedicine, to be efficacious, needs broadband connectivity. And so it’s an existential need.
“I’ll call it the market failure. It’s the classic example of, ‘Hey, look, the markets by themselves are just not going to address this.’ But at the same time, there are very capable telecommunications companies in this country. They will probably need some encouragement and incentive. And we’re doing our part by creating some alternative paths. The entire Airband initiative is to get local ISPs to use even this spectrum that’s available in TV white space and create broadcast solutions.”
“I think the social contract of any corporation or enterprise is to create profitable solutions to overcome the challenges of people and planet. Absolutely, tech does owe something back to the society. But one of the things I would add is that it can’t be that you have a core business model that is not aligned with the world and then do ESG (environmental, social, and governance). That’s not doing anybody any good, really.
“You’ve got to have at the core of your existence your sense of purpose and mission. I tell you that’s what makes me sleep well at night at Microsoft. Because if Microsoft is doing well, that means we’re creating productivity for that small business somewhere in the world. A multinational that’s becoming more productive, employing more people, creating jobs. Public sector is becoming more efficient. Educational outcomes, health outcomes are getting better. That alignment, where we do well if we can drive good outcomes for communities and societies and countries around us. That, to me, is at the center of it.
“It’s not about, ‘Okay, let’s first go make a lot of money, and then let’s worry about ESG.’ I don’t subscribe to that point of view. As a first unit of scale, at the core of your business model, are you creating a surplus around you? That, I think, is the question. As you know, in tech, there seem to be two business models: a business model like ours which is predominantly platform, and then there are these aggregator business models. And I would say that the platform business model is aligned with that premise [of] a core social contract. I would question the business models of these other companies.”