top of page

Microsoft's struggle to reconcile defence contracts with employee's ideals

Image credit: Keso s (Creative Commons: Flickr)

Last month the US Department of Defense announced that Microsoft would be one of two finalists bidding for the landmark US$10 billion-dollar Joint Enterprise Defence Infrastructure – JEDI – contract to restructure the Department’s end-to-end IT infrastructure into a cloud services solution.

Whilst the program is an important step towards modernising American defence, it has also sparked criticism towards the internet industry’s participation in defence projects. This is a delicate issue that Microsoft is very familiar with. Last year the company provoked outrage when it developed cloud technology to assist with the US Immigration and Custom’s Enforcement’s (ICE) policy of separating children from their families at the US-Mexico border.

Likewise, in March it faced criticism for its development of the HoloLens-2, an integrated visual augmentation system designed to assist US troops in combat.

Although in both cases Microsoft’s CEO, Satya Nadella, has forged through the public criticism, he must be increasingly delicate in his decisions to avoid similar discontent from arising internally. Whilst these defence contracts are lucrative, they threaten Microsoft’s more valuable long-term assets - its employees.

Reputation is everything

In this respect, Google’s experiences are useful in illustrating Microsoft’s potential future dilemmas. Last year, Google employees wrote a letter to their CEO, Sundar Pichai, protesting the company’s prospective partnership with the DOD over Project Maven: the development of artificial intelligence to assist in the analysis of military video drone footage.

The letter, which accumulated over 3,000 signatures, detailed how the employees were concerned that such controversial contracts would ‘irreparably’ damage Google’s reputation. It reflects on how, with Google’s ‘unique history’ and its motto of ‘Don’t be Evil,’ such contracts would harm the company’s ability to retain public trust and, linked to this, recruit talent.

Google’s self-perceived reputation is an altruistic icon and should be taken with extreme cynicism. But as the outcome of the letter shows, there’s no doubting that it cares considerably about the opinions of its employees.

Internet companies have invested heavily in attracting those from the finite technology talent pool. They have marketed themselves with a sense of purpose to match many of the idealistic and conscientious ideologies of their employees. However, exactly because of this tight and competitive labour market, these employees can exercise considerable leverage over these companies when business decisions they disagree with are announced.

In an era of heightened ethical awareness, it is a strategic imperative for internet companies to refrain from accumulating poor reputations lest they repel the talent that is key to their long-term growth.

For Google, the frustrations and catalysts for a significant exodus are already in place. Various employees have begun to quit in protest against many of its controversial projects.

Admittedly, Microsoft’s circumstances are distinct from Google’s. Google’s recent controversies over data and particularly strong liberal culture have undoubtedly contributed to its stronger internal backlash.

Comparatively, Microsoft has managed to avoid significant investigation and criticism for its data collection and privacy issues and has carefully developed its reputation and culture to be less flashy than Google’s and instead more receptive and inclusive. Accordingly, the past two years have seen Microsoft rise from the 14th most desired employer for millennials to first, while throughout the same period Google dropped from first to fourth.

Nevertheless, Microsoft is not immune from the negative externalities of its contracts, with fliers having recently appearing at Stanford, the top college from which Microsoft recruits, urging students not to apply to the company because of its work for ICE.

Troubleshoot: There was a problem with your company

Strategically, a strong relationship between the Department of Defence and companies like Microsoft is critical. As science and artificial intelligence take a greater role in defence and security Western governments should be privy to the best technology in the industry. China has stated its intent to dominate artificial intelligence, quantum computing and other technologies in the next decade and already invested significant financial sums to that goal. To not take advantage of the talent developed in the western hemisphere is a significant handicap in this technology race. The next business decision for Microsoft must, therefore, be how it pursues these contracts without harming its reputation.

Microsoft’s response to the criticism has been accommodating yet also resolute. It’s argued its belief in a secure United States that has access to the nation’s next technology; it appreciates the ethical issues around AI intelligence, and it respects employees’ desire to disagree and distance themselves from certain projects.

Whilst the response has largely been overlooked, Nadella may find respite in that final reflection. Though internal criticism exists there will be those that nevertheless agree with the company’s direction. As such, the prospect of a subsidiary division would allow for Nadella to insulate the Microsoft brand from its more controversial projects whilst coordinating with willing employees on these projects.

If the goal is to protect its brand, then an appropriate troubleshoot will need to go beyond charming marketing. Whilst Nadella has been effective at dodging significant external criticism, he will struggle more to avoid reproach if it is coming from and is a result of work within his own building.

Michael Nguyen is the Cyber Security Fellow for Young Australians in International Affairs.

bottom of page