Mark Green Grills Microsoft President About Company's Operations In China

last year

During a House Homeland Security Committee hearing Thursday, Rep. Mark Green (R-TN) spoke about Microsoft's operations in China.

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Transcript

00:00for five minutes of questioning. I was intrigued from your statement and your written testimony

00:05about the, you know, let me start by saying this. We as human beings respond to incentives.

00:19Economics is about the study of incentives. And you mentioned the recent payroll changes

00:27for your senior executives. And I wonder if you're at liberty to discuss how deep that

00:32goes, you know, what level of leadership. And I think that's a novel approach. And I'd love

00:41to hear more about that. Sure. Let me say two things. First, the Board of Directors

00:47took the first step yesterday, and it acted a bit ahead of schedule. We ordinarily make

00:52these decisions in July, August. But for the 16 most senior people in the company, including

00:58our CEO, including me and others, with the new fiscal year, which starts July 1, one

01:04third of the individual performance element of our bonus will be about one thing and one

01:09thing only, cybersecurity. So that's the first thing. Second, the board did note that when

01:15it awards bonuses for the fiscal year that ends at the end of this month, it will take

01:20cybersecurity performance of the individual executive into account. But the thing we probably

01:27spent the most time as a senior leadership team talking about the last month or so is

01:32how to create incentives for everybody. And of course, it's based on the culture of the

01:38company and our processes. So twice a year, every employee has a forum and a conversation

01:44with their manager. We call it a connect forum. And they first reflect and show what they've

01:49done and then the manager comments and they talk about it. And so what we've created is

01:54a new piece of this that everyone will have to address on cybersecurity. And the thing

01:59I like about it most, to be honest, is it gives every employee at Microsoft the opportunity

02:05to think, what have I done? What could I do? How am I doing? And then be rewarded at the

02:13end of the year based on that.

02:15That sounds that's encouraging. Having run a company myself, I think how you tie the

02:22incentives drives performance and what people make the priority. So I appreciate that. Let

02:27me ask a little bit about your involvement in China. I'd love to get a little bit more

02:31detail granularity on where you are right now. You know, what's your current posture?

02:37And you know, what are you sharing with the Chinese people? Or to the Chinese government?

02:40I mean, are you having to give up code? And what what the involvement there is, if you

02:46don't mind elaborating on that a little bit?

02:48Sure, it's a broad topic. We have a few different activities in China, it's not a major source

02:56of revenue for Microsoft. Globally, it accounts for about 1.4 1.5% of our revenue. We do have

03:05an engineering team that we have been reducing, and we announced most recently, that we were

03:10offering about 800 people, seven or 800 people the opportunity to move out of China, and

03:15they were going to need to move out of China in order to keep the job they have. So we've

03:19been reducing our engineering presence. There are two things that we do that we believe

03:25are very important. First, we do run some data centers, cloud services, principally,

03:34I would say for the benefit of multinational companies who do business in China, and we're

03:39not alone. Others in our industry do the same thing. But the reason I think this is so important

03:44is if you're an American automobile company, an aircraft company, a pharmaceutical company,

03:50a coffee company, you need to use the cloud when you're in China. We want their American

03:57trade secrets to be stored in an American data center in China.

04:01I mean, if I could jump in, what access does the Chinese government have to that?

04:08None.

04:09Okay.

04:10And believe me, every time there is anything remotely close to a request, I always ensure

04:18we say no.

04:19Okay. Very specifically on this hack, because it did come from China, can you talk how you

04:25are with your presence in China, ensuring that that source isn't going to use your location

04:35in China as a vector? If you can, what are you doing there to prevent that?

04:44I think it involves having very direct understanding yourself of what your guardrails are, what

04:53your limits are, what you can do and what you won't do. You have to know your own mind.

04:59We do. Second, you've got to be prepared to look people in the eye and say no to them.

05:07And that's something I do myself. I was in Beijing in December. I got pushed because

05:13there was unhappiness about reports that we've made publicly about attacks from China, about

05:21U.S. critical infrastructure and about influence operations.

05:26And I said, there are lines that we don't believe governments should cross. We're going

05:31to be principled and we're going to be public. And there are many things we're not going

05:37to do in China and there will be things we're not allowed to do in China. But I think at

05:41the end of the day, we have to know our principles.

05:45Thank you. My time has expired and I now recognize the ranking member for his five minutes.

Mark Green Grills Microsoft President About Company's Operations In China

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