President , what is the premise of your new book . It is that Digital Technology has become both a tool and a weapon, creating kinds of benefits and all kinds of challenges as well, and we have to grapple with both sides of the equation. Your book is essentially a world tour that begins in quincy, washington. Why . Because it is one of the data center capitals of the world, if you will. It is near the columbia river. Data centers are being built there because it is close to hydroelectric power that is cheap and clean. We take the reader on a tour of what is becoming the infrastructure of the 21st century, these mammoth buildings, more than 20 of them, filled with electrical generators, thousands of batteries, and mostly server computers. Everything we do almost every day is accessing or storing our data in the cloud, which really means one of these data centers. Peter you have 100 of these in 20 countries . Brad more than 20 countries, more than 100 data centers. Microsoft is one of the largest but google, amazon, facebook, apple, are all building more and more of these data centers. It is where we are all storing our data. They become the Largest Consumer of electricity in the world. Peter if i send an email from Microsoft Outlook from here in the office to somebody in the office, does it go through the Microsoft Data Center . Brad it doesnt have to. You can use it in a form where you store it on your laptop or store it in a computer in your office, but the world has moved to the cloud over the last decade. It is cheaper, more secure, you are always going to have the you can rely on microsoft Cyber Security team rather than say those in your office. So the world is shifting and most technology is moving in this direction. Peter what does it cost to build one of those buildings that you say is about the size of two football fields . Brad any time we open a new data center, by definition its an investment typically of hundreds of millions of dollars. If you look at microsoft, if you look at the other Industry Leaders collectively, were easily spending several tens of billions of dollars a year just in building these new buildings, connecting them electrically, putting all the computers inside them. Peter what kind of investment do you make in securing that cloud . Brad its a fascinating piece of this. Of course its enormously expensive. It starts with the physical security. You cannot get into the ground, around these premises, the physical security is certainly tighter than what you would see in a commercial airport. But its really the Network Security thats more important still. So we spend a billion dollars a year just on new security features. Ats really r. N. D. And innovation. We have 3,000 security engineers protection the protection of this has become a huge priority. Peter brad smith, you say that you were search on your way out of this facility as well. Brad yes. Its fascinating because youre not surprised when you go into a data center and before you go into the inner san tum so to speak, the room with the computers, the servers, you have to go through a second very tight airportstyle mettle detector. But then youre searched when you leave as well. Why am i being searched to leave . I dont get searched when i leave the airport. And so no one can walk out with a hard drive. Literally the only way the hard drives leave that room at the end of their life is by first going through what is a huge machine. Its the equivalent of a Paper Shredder but this is for literally metal hard drives. And then it leaves through its own special exit. Peter you write in your book tools and weapons that ireland is to data what switzerland is to money. What do you mean . Brad ireland is a great place to store data. And switzerland is regarded across europe, across the middle east around the world in many ways as a safe place to store money. Its secure. Ireland first of all is a great place to build data centers. The temperature is mild. You dont typically have to turn on the heating or the air conditioning and uses less electricity as a result. But more than that, what we really mean is it has a network of laws that protect privacy, that protect data. It has a stable government. Its part of the european union. So it has access to the rest of the e. U. For moving data back and forth. Its one of the worlds most attractive places to store data. Peter but its an island as well. Dont you need cables to connect . Brad well, that is a fascinating part of this story as well. The Irish Government has long had a lot of forsythe i would say when it comes to planning for its economy and thinking about technology plags the american tech sector sort of got started in ireland in the 1980s. Its where everybody manufactured their c. D. s back then. So as we got close to the year 2000 the Irish Government came to us in the United States. They saw the future. They said make ireland the place to build a data center. We said but you dont have any cables to move data to the continent. And they said give us three months. We will go solve that problem. And three months later, they had. They came back. They had entered into a contract and the cable was just about to be laid. And the rest is history. Because ireland really has become a place where by our calculation about 35 of all European Data is stored in ireland. Peter so brad smith, whats the advantage of having these Data Security locations, these clouds, as tools . Brad well, as tools, they are really enabling businesses to do new things. First of course perhaps driving down costs. And enabling businesses and governments and others to rely on other peoples advanced security protection. But fundamentally what all of this is doing is enabling people to use technology in new ways. We really have in our view entered a new era. Its an a. I. Or artificial intelligencebased era. If you think back to the first half of the 20th century, the Combustion Engine changed everything. Led to the car, the tractor, the truck, the tank, the airplane. Over the next three decades, a. I. Will have a similar impact. Its already making it possible for machines to understand speech, what people say. Vision, to understand peoples faces, to recognize people, to translate between languages, all of that is based on several things but perhaps the most important is this large amount of computational power of data storage in the cloud meaning these data centers. Peter you also in your book tools and weapons talk about the weaponization of data. Which is what . Brad well, it too is many things but i would say it starts with cyber attacks. It starts with headaching by organized crime. It starts these days with hacking by nation states. Hacking of political campaigns and think tanks and the like. It includes disinformation campaigns. It includes the potential hacking of voting and elections. It includes a variety of other challenges that may not be weapons per se but when we think of the impact of all of this technology on our jobs, what is it going to mean for our people, our jobs, our children, their jobs . All of these are the challenges that technology is creating. Peter and you that takes us on our tour to north korea, russia, and china, doesnt it . Brad it absolutely does. As well as iran. Were seeing certain governments around the world be particularly aggressive. We measure this every day. We see the attacks that are taking place. We have been public in saying that weve seen the most attacks over the last few years coming from russia, north korea, and iran. Especially attacks that tend to be more focused on our civilian infrastructure or on our electoral processes in particular. Peter what is microsofts business interests when it comes to china . Brad well, i think we want to serve our customers when they do business in china. China is not as large a market for us as it is for some other Tech Companies. China has 18 of the worlds people. It accounts for 1. 8 of our revenue. But if an American Company wants to go to china to sell coffee, we want to be able to use our services in china the same way it does everywhere else. If there are consumers in china who want to use windows on their laptops, office, to write their documents, to send their email, we want them to be able to do that. So we want to participate in that economy. We want to participate in the Global Economy in a thoughtful way, in a way that actually is focused on u. S. National security and the protection of human rights. But also serving people who in our view need to be served. Peter but in tools and weapons you talk about the fact that microsoft does judge a nation on its human rights score, correct . Brad before we open a data center in a new country, we evaluate many things. Do we have access to electricity . To water thats needed for a data center . Do we have concerns about corruption risk and the like . And we have evaluate human rights. We use that human rights evaluation to make decisions. There are some countries where we wont place a data center because we feel that once the data is gh that country, we cant protect peoples rights the way they need to be protected. And theres other countries where we will put data. This is china as one of them. But we wont put our consumer services. So we have, for example, a Consumer Email service outlook. Com is its current name. We dont offer it in china because we dont feel that we can strike the balance we want to strike in terms of protecting human rights. Peter and with china moving toward this social Credit System that theyre having, are we in danger of perhaps having two worldwide webs, two internets separate . Brad i think over the past decade, there has been a trend in that direction. I think that one sees two countries in the world today that tend to be producing the most tech leaders. Its the United States and its china. You see less American Technology in china. You see less Chinese Technology in the United States. You see different laws, different public policies. You know, to some degree even some distinctions in business practices. And then you see competition, especially in places like europe as they decide where theyre going to buy, who theyre going to buy from. Peter brad smith, you call for regulation in this book. And in fact bill gates in his forward points out the anomaly of a Business Leader calling for more regulation. But youre writing that you need that. You need to have that regulation. Brad i think we need two things. We need businesses in the tech sector to step up, exercise more selfregulation and a higher commitment to responsibility. But we do think we need more regulation of technology. Think about how we live our lives. If you go to the Grocery Store and you pick something up off the shelf, you will read the nutrition label, knowing that its standardized and accurate because of regulation. If you go over to the Pharmacy Department and buy a product, you dont worry about the safety of it. Because its regulated. When you get in your car, it complies with certain Safety Standards the same is true of an airplane. Our basic point is that Digital Technology has gone longer with less regulation than almost any Technology Since the middle of the 1800s. We think that the market customers and even the industry itself would be better served for the long term with a different balance. Peter well, that kind of takes us to washington, d. C. , because bill gates took a lot of pride in the fact that microsoft did not have a d. C. Office for a long time. Brad and bill points out in his forward that he did take pride in that. And then he learned that there were probably some Better Things there were clearly some Better Things in which he could take pride. And we are here today. Were in actually 56 capitals around the world. Peter you conclude your book by saying technology, innovation is is not going to slow down, the work to manage it needs to speed up. Brad we really do believe that governments need to speed up. I used to come to washington d people 15 years ago here didnt understand technology deeply. I think many times today, they often do. They understand it much better. And i think to some degree politicians get a bad rap. I think journalists look for the opportunity to point out oh, heres a politician that didnt ask the right question or heres a politician that didnt ask the question the right way. And i think thats frankly a mistake. I dont think its accurate. I dont think you actually serve anybody well whenever you criticize them for asking a good question the wrong way. The truth is we have regulators and politicians today that have figured out how to regulate very complex pharmaceutical products. We have people today that regulate airplanes that are basically computers with wings. They regulate the Safety Standards for cars. Theyre basically computers on wheels. We have people who are perfectly capable in washington, d. C. Of regulating computers that dont move at all. They sit in a data center. And i think as a country, as a world, we need to strike a balance with a healthy dose of regulation. Peter so when it comes to privacy, what would microsoft like to see . Brad we would actually like to see a Strong National privacy law in the United States. We have been advocating for that. I personally have been advocating for that since the year 2005. You can see how little impact weve had in washington, d. C. On that issue over the course of a decade and a half. But we think its actually a good thing that california adopted a strong privacy law last year e we think its a good thing that that is now bringing the debate to washington, d. C. I think that the american public, consumers, customers, even Tech Companies will be well served if theres a good privacy law, a strong prichecy law in the United States. I think for the next decade, what we really need is more of a global privacy compact. Data moves around the world. You dont actually want the protection of peoples privacy to constantly change every time data crosses a border. And well only get that when we bring governments together. Eter what do you think of the european gdpr . Brad on balance we are pretty enthusiastic about it. We have been more enthusiastic about it than most companies in the tech sector. Peter is that because you do Different Things . Or brad to some degree you can say we do some Different Things of the were not as focused on monetizing data through behavioral advertising and the like. But i think in part it reflects our own experience with laws, with regulation, the antitrust cases that we learn from when they unfolded in the 1990s, in the early 2000s. I think in some respects it reflects a belief that a market will work best and the companies that participate in it will succeed the most for the long term if consumers have confidence. Peter mr. Smith, whats the current status of International Cooperation on these issues . Brad i think that there are signs of progress and a lot of heffed winds. You see signs of progress on Cyber Security, on issues like digital safety. Weve seen some really impressive leadership last year by the french government, this year by new zealand prime nister jusinda agur in the christchurch terrorist attack to advance digital safety. And i think that is creating a model that we can look to more broadly. But were also living in a time when multilateralism is less popular certainly less popular in the United States than perhaps any time since the 1930s. And in part, our book is a call for governments coming together with companies, with sism society in a multistakeholder approach. We just dont see any other effective alternative for addressing the challenges that people care about. Peter christchurch, new zealand, takes a part in your book, too. Brad it does. By coincidence really, we were in new zealand 12 days after the christchurch attack. During the course of the day, Prime Minister arduns Office Reached out. We heard that she wanted to meet with us so of course we did. It was a fascinating conversation. She said look, i just dont want to see what happened in christchurch repeated. And what happened there was different from other terrorist attacks because the attacker really used the internet as a stage. It was streamed live on facebook. It was uploaded probably millions of times on youtube. Its the kind of thing that actually can incentivize terrorism if were not careful. And so we said lets see what we can do together and really thanks to her leadership more than any single thing, she got on the phone. She called other tech leaders. We worked with others across the tech sector. And it led to whats called the christchurch call. It was signed in paris by september in new york at the u. N. , there were more than 50 governments that had signed up as well. But it has facebook and it has google and it has youtube and has amazon and has twitter and has microsoft. And weve all committed to take now some very concrete steps that i think make it harder, certainly harder for any trichet to do what was done in christchurch. Peter how often do you find yourself and this is something you write about working with the federal government and or suing the federal government . Brad well, we work with the federal government every day. And we probably sue the federal government on average every year. So thats the balance. And of course once a lawsuit starts, you have to continue it. We nev