By Adam Lashinsky and Robert Hackett
June 11, 2019

The old Milton Friedman saw about corporate social responsibility, that the only obligation of business is to use its resources to “engage in activities designed to increase profits so long as it stays within the rules of the game,” has been thoroughly discredited. It is widely believed today that enlightened businesses ought to do good for multiple stakeholders as they endeavor to do well.

Still, the businesses that best pull off this multi-faceted feat are the ones who keep focused on why their good works help the business—and not merely from the positive sheen of giving away money.

Microsoft, for example, decided to invest nearly $500 million from its own balance sheet to boost affordable housing in its home region. As Brad Smith explained to an audience Monday evening at Fortune’s CEO Initiative annual meeting in lower Manhattan, the tech giant favored investments rather than grants for being more effective. Its efforts, while well-meaning, also are literally self-serving: Microsoft understands that the many non-Microsoft members of the community who serve its employees need to find a reasonably priced place to live. Achieving housing affordability is a win-win.

Smith also explained why Microsoft supported higher taxes on businesses in Washington state to fund post-secondary education. It lobbied successfully for legislation that generally raised taxes on businesses, but raised them the most for the two most valuable companies in the state, Microsoft and Amazon. (He implied that Amazon needed some convincing but ultimately supported the measure enthusiastically.)

Microsoft is taking a thoughtful approach to artificial intelligence and facial recognition too. Smith says it persuaded the state of California not to pursue a contract that would result in biased results and that Microsoft turned down a commercial opportunity with an unnamed “authoritarian regime.”

It’s an amusing turnabout that a company no one would have considered a warm and cuddly corporate citizen 20 years ago—Smith didn’t dispute my somewhat differently worded assertion to this effect—has become such a thoughtful civic and global policy leader.

Microsoft makes a lot of money too.

Adam Lashinsky


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