Interview with Brad Smith, Microsoft President and Vice Chair APEC CEO Summit
11 November 2021
Brad Smith, Microsoft President and Vice Chair: Thank you, Vanessa. It's a real pleasure for me to be here with Prime Minister Scott Morrison from Australia today. Mr Prime Minister, thank you for joining us.
Prime Minister: Well, thank you, Brad and Kia Ora, to everybody in New Zealand and everyone joining us for this important session. Very happy to be here.
Brad Smith, Microsoft President and Vice Chair: Well, Prime Minister Morrison, I think one thing that's apparent to somebody like me who has the opportunity to work on a global basis on technology, is that Australia has become such a global leader. I think the country has become a global leader in the use of technology, the growth of the tech sector, as well as really in some ways, defining the next frontier in legislating and regulating technology. You have the critical infrastructure regulation, the news media bargaining code. You remain on the forefront of protecting consumers and addressing competition issues through the ACCC. I thought I might start with a question that captures all of that as you have needed to lead the government and address such a variety of issues and factors. How have you sought to prioritise issues and just to balance all of the societal interests that are at stake here?
Prime Minister: Sure. Well, look, thanks for the question. It's a very practical response that we've had here in Australia. We recognise the massive opportunities that can be delivered, obviously through digital platforms and digital technologies. That's a no brainer. And that section of our economy is growing four times faster than the rest. So it's obviously an important source of income and wealth and jobs for our country. And we embrace it 100 per cent and we have the goal of being one of the top 10 digital economies in the world by 2030. But when you're looking at your digital sector, it has developed well ahead of where the regulatory settings have been. And we have a very simple rule. The rules that apply in the real world should apply in the digital world. So whether that's antitrust or whether that's consumer protection, whether it's paying tax, whether it's respecting content and all of those sorts of issues, I mean, we can't treat the digital world like it's the Wild West and it's a lawless space and you can't have business models, which depend on it being that, either. And so the way we approach it is to set that up as a very clear rule. If you can't do it in the real world, you shouldn't be able to do it in the digital world. But equally, if you can trade in the real world, you should be able to trade in the digital world, if you can share information in the real world, you should be able to do it in the digital world as well. And so it really is about a process of modernising and bringing up to speed all of our rules, that weren't written for a digital world, and making sure that they're relevant in one. Now, we think it's very important, as I know, you know, at Microsoft and others we work with, whether it's Google or whoever, Facebook, or the many others who are involved - Amazon - it's important that those who are creating this digital world are part of that process because if you just leave it to governments to do it, well, they'll stuff it up. Because they don't understand it the same way. And I think there's always been a lot of benefit in a regulatory partnership which sees these, these rules that are put in place, which get the best out of digital platforms, but also don't let those digital platforms operate with a free kick, ie, different to what would happen in in the normal real world. So that's how we approach it. It's just a very practical project. And so whether that's our Online Safety Act, as you said, the media bargaining code or making sure that companies pay tax and where IP is recognised and all of these are just practical issues, they're not ideological questions, they're just straightforward technical issues that need to be resolved. They're better resolved in partnership because if they're not, governments will just do it anyway. And when we will do it, we won't do it as well as I think we possibly can. And each time we've done this now, I think it's got better and better and better because the partnership has got better. I think the sector hasn't resisted these things as much as it frankly did originally. And business models now, I think, are taking into account a broader accountability and responsibility for the safety of the digital world in which in which citizens, and particularly Australian citizens, reside.
Brad Smith, Microsoft President and Vice Chair: But at the same time that you've been moving forward with this legal framework, the tech sector in the Australian economy has continued to grow. It's been an interesting, as you said, you want to be a top 10 digital economy by 2030. I think you might achieve that result well ahead of 2030. What I find interesting in part, is when you look at the Australian economy today, the two largest sectors are financial services and mining. That's probably not surprising to people who follow Australia. But technology is now the third largest sector in the economy. When you just take stock of what the Australian economy has been doing in recent years, to what do you attribute that rapid growth?
Prime Minister: Well, "getting it", for one. Understanding that that's where the world's heading, and being very practical about our response, and the responses aren't just what we've just been talking about in the regulatory space. I mean, if I go back to what we've been doing in fintech and when I was the treasurer, we created the regulatory sandbox, which was enabling, you know, the developers to be able to operate and try new products and get them to a point. It's very frustrating, I think, in the tech sector where the regulation can kill a venture before it even gets out of the ground, basically. And so creating that space and that room for innovation and the technology to, to be able to flourish. In addition to that, I think it's about getting the right skill sets in place. We are investing a lot in the digital skills of our population, of our workforce. It's one of those critical skill sets that we want in our workforce. And it really doesn't matter what industry you're in. Whether you are in the manufacturing industry, the services industry or even the high tech sector itself. These critical skills, whether at a vocational level or a high end level in our universities, you know, where we're looking to make advances in critical technologies like AI and so on, we need the high end skills. But basically your population needs those skills. Australians are actually quite good at applying technology. Kiwis are the same. You know, we develop quite a bit ourselves. That's true. But much of it is developed elsewhere. The real value comes, as you guys know Microsoft, is when you apply it to problems. Apply it to businesses. Get it utilised within your small business sector in particular. I mean, take this, for example. I mean, we've put in place our payments platform now, which is 24-7. And one of the most important things, for financial architecture, is to ensure you can get immediate payment. Now, if you're a small business and you don't have to wait seven days to get paid, your cashflow completely changes. All of your financial risks change. Everything that you can potentially do changes. Something as simple as that infrastructure investment, which is similarly what we're doing with the National Broadband Network, which is rolled out right across the country now. And the other thing I'd add to this, in addition to the infrastructure, is cyber security. Cyber security now is more important than ever. All systems are vulnerable both to, you know, criminal actors, state actors. This is the real world of cyber security. And, you know, for it to be successful, people have to feel very safe in there from a commercial point of view. And we've always given that a very high priority as a government, not just for our own systems, but to ensure we're working with our corporate sector to ensure that they can have confidence about their cyber security systems.
Brad Smith, Microsoft President and Vice Chair: Why don't we pick up on that last theme for a moment, because you have been, and the whole government has been so focussed on cyber security, including in the context of supply chains. Can you tell us a little bit about what you're aiming to accomplish when you're thinking about the resilience and security of supply chains for technology and what that means to Australia?
Prime Minister: Well, you've just hit it on the head. Security and resilience. I mean, that's what it's about. And Narendra Modi, I quote him often on this, supply chains used to be about cost and efficiency, and that is still true. But he says now more than ever, they're about trust. And that trust is about who you're doing business with and we've learnt that during this pandemic. Trusted supply chains are frankly more valuable to you than some, that might actually be a bit cheaper, because you know they'll always be there. And the resilience of those supply chains, yes, it requires their digital security, but it also means that there is a a like mindedness between partners now that is probably more important than ever. Those supply chains, yes, they have to be resilient. Yes, they have to be secure. But they also have to be competitive. And what I mean by that, particularly in the rare earths and critical minerals sector, we discussed this at the the summit, which President Biden pulled together at the end of the G20 in Rome, just last week. And both Canada and Australia were making these points very, very strong. Justin and I were making these points. That, you know, the critical minerals rare earths supply chain and what it feeds into with new energy technologies and what will take the world towards net zero, at the moment is very dependent on largely one supplier, which has the ability to apply a lot of monopolistic power to prevent other supply chains being developed. Now, Australia feels very strongly about ensuring that the alternative supply chains around rare earths and critical minerals can be developed and support whole new lists of customers that operate at various points down the chain. And this is something we've been championing through the Quad. Together with Australia, the United States, Japan and India. Four countries that, between us, can encompass entire supply chains, particularly in the technology and clean energy supply chain space. And so that is a very important project for us. We all have different roles to play in it and ensuring that we can build that up over time. We'd love to see European economies become part of that as well. I've discussed it in the past with President Macron, for example. And so whether it's in the UK or across in Europe, we do see real opportunities to develop these alternative supply chains. Because it also feeds, not just in sort of digital technologies, but it plays a huge role, obviously, in the in the new energy technologies as well. And next year, early next year, we're hosting, through the Quad, a clean energy supply chain summit in Australia. Now, that's not about getting politicians together, they get together often enough through APEC and all the other events. This is about getting the scientists, the technologies, the entrepreneurs, the industrialists. Yeah, there will be a few of us there too. But there will be regulators there as well. And getting those minds in the room about, you know, where we can actually develop these partnerships for these supply chains to be durable, resilient, trusted and secure. And most of all, competitive.
Brad Smith, Microsoft President and Vice Chair: And let's, if we could, build a little bit more on that looking forward. Obviously, the world is not yet out of COVID, but I think around the world people are increasingly looking beyond it. They're talking about what needs to come next. Technology played a role during the pandemic of just sort of sustaining economic activity. When you look at Australia's economy and the country's needs, say, a year or two from now post-pandemic, are there new or different challenges we're all going to need to talk about? Is the role of technology going to need to adapt in any particular way to help support that?
Prime Minister: The short answer is yes, but the short answer to that question is always yes. I think regardless of what's occurred. During the pandemic, our digital pathway just accelerated like most, I think, advanced economies around the world. There'd always been a bit of a resistance, not through anything other than people were comfortable with the way they were doing their books, the way they were invoicing, the way they were talking to their customers. There was a familiarity to do that, particularly in the SME sector. Enter COVID, the only way you can talk to people then is on a digital platform. And so businesses, you know, radically changed their business models overnight to survive and that has caused an innovation in the application of technology to so many businesses in Australia and really given us a very strong leap forward in this space. Similarly, for consumers, I mean the amount of retail and so on, which is now being done through parcels and post - in the United States, that's already been happening for some time - but that really has come on very strongly here. And so the role of big distribution centres and the technology that support those and how that feeds in, you know, operating in real-time and the competition is now on is how quickly can you get it from the click to the front door that's all happening now in Australia. And that's, I think, good for our economy because it's challenging our economy and our business models. Then you've got the consumer interface with this. One of the disturbing and distressing parts of the pandemic is because all of our kids have been online doing school and frankly, just catching up with their friends and doing all of those sorts of things, the presence of criminal behaviour online and predators and all of this actually is accelerated also. You know, the crooks are just as good as applying technology as anyone else. And we've seen that in this country, we've seen it all in all countries. And that's why our regulatory systems and our protection systems really have to kick in and go to a whole other level. And that's where I do really appeal to the digital platforms in the sector themselves. We remember after Christchurch - the terrible events there with the massacre - and I took a proposal to the G20 following that and of course, there was the Christchurch Call led by Prime Minister Ardern together with President Macron. And the digital platforms have responded to that and they do have the technological capabilities, I think, to prevent the digital platforms, the internet being used as a weapon for terrorists. But we need to now make sure that it's not being used as a tool for people to harass people, to exploit people, to intimidate people. We're seeing this more and more the impact on the mental health of our young people, through cyber bullying and cyber abuse. And there are two key issues here, I think. The first one is to recognise that, you know, digital platforms are publishers. And the second one is free speech only works in a free society where there isn't anonymity. Free speech isn't about to say whatever you want and not be accountable for it. That's the whole point of free speech. Say whatever you like in our country, but you're accountable for what you say. We can't have digital platforms providing a shield for people to engage in online abuse, because if we allow that to happen, digital platforms will not be a safe space for consumers, for our children - we won't get the right outcomes on education and skills development and the broader, you know, commercial opportunities that are there. So we all have to work, I think, even more closely together to make the digital world safe. And that's not just about hacking and cyber security. That's about the interactions of people online. And we don't think those rules are tough enough and we are moving forward on that. Online privacy for young people, I mean young people, particularly children, shouldn't be able to have their data used in such a way where they can be targeted and we all know how the algorithms work. You know, adults are different. Kids need protection. So they're the challenges I think we have to have an environment that keeps the world safe online. Just like as I started out saying, they're the rules that exist in the real world - they should exist online too.
Brad Smith, Microsoft President and Vice Chair: Well, I know we're now coming to a close so I want to say thank you, but I think you've just laid out in such an exceptional way a framework for all of us to think about. We're accelerating use of technology, as you put it - it's not just about development, but it's about deployment, it's about applying technology. And that really requires that we learn from the pandemic. As you said, invest in the digital skills for people, stimulate its use, make sure it's subject to the rule of law, that we have supply chain resilience and trust and that we keep people safe. So I think in short order, you've given us a lot of the formula that we're all going to need to talk even more about. So thank you. Certainly, from my perspective and on behalf of Microsoft, it's a real privilege to have the opportunity to talk.
Prime Minister: You guys are a great partner and I appreciate the work you do with us as well, because government has to do their bit too. And we've learnt that in the pandemic as well, you know, everything from downloading a digital vaccination certificate, to scanning codes when you're going into restaurants, you know, the government has been doing its bit, ensuring that we're delivering more of our services directly, which is a way of getting your whole population digital. So it's the big challenge, but I think it's going to mean a lot for all of our economies and I'm very pleased it's on the APEC agenda. Thanks for the chat.
Brad Smith, Microsoft President and Vice Chair: Ok, thank you. Thank you again.
