Microsoft CEO Nadella stands by $10 billion Pentagon contract win, even though some employees have revolted

CNBC Technology 1 week ago

Despite a history of employee concerns, Microsoft CEO Satya Nadella said in an interview published Mobday that the company is pressing forward with its commitment to the massive Joint Enterprise Defense Infrastructure, or JEDI, contract it won last month.

The contract, which is worth up to $10 billion over the next ten years, will see Microsoft build cloud resources for the Department of Defense. While some employees have expressed ethical concerns about doing work for the federal government, Nadella said the company has a responsibility to collaborate with American institutions.

"...as an American company, we're not going to withhold technology from the institutions that we have elected in our democracy to protect the freedoms we enjoy," he said in an interview with Quartz. "That's something that is a principled stance we have taken, and we are very transparent about it."

Nadella said he understands not all Microsoft employees will agree with the decision to pursue and fulfill the contract, but he is committed to being forthright about how the leadership team makes these decisions.

"It's not necessary for all of the 100,000-plus people at Microsoft to agree on everything, but for us, as a management team, [we need] to be very clear about the decisions we make, what are the principles and be transparent about it," he said.

When Microsoft executives expressed interest in bidding on the contract roughly one year ago, employees pushed back with an open letter that called on Microsoft not to pursue the contract.

"This is a secretive $10 billion project with the ambition of building 'a more lethal' military force overseen by the Trump Administration," anonymous employees wrote in the letter. "If Microsoft is to be accountable for the products and services it makes, we need clear ethical guidelines and meaningful accountability governing how we determine which uses of our technology are acceptable, and which are off the table."

It's not the first time a Big Tech company has faced backlash from employees over a government contract. Last year, Google faced resistance from employees about Project Maven, which gave the military access to the company's AI technology. Google eventually ended its Maven partnership with the government after the backlash. And last year, Amazon employees pushed back against their employer for selling facial recognition technology to law enforcement agencies. Also in 2018, more than 600 Salesforce employees signed a petition calling on the company to terminate its contract with U.S. Customs and Border Protection.

Microsoft executives have had plenty of time to practice their response to such employee frustrations. Earlier this year about 100 employees wrote an open letter saying they were "alarmed" to learn that the company was selling its augmented reality HoloLens technology to the military. The letter in February called for Microsoft to terminate the contract, and there's no sign the company acted on the suggestion.

Microsoft has shown no signs of uncertainty about its commitment to the lucrative contract.

"We are proud that we are an integral partner in DoD's overall mission cloud strategy," a Microsoft spokesperson said when the company was awarded the contract. Wedbush analyst Dan Ives called the deal a "game changer" for Microsoft, writing in a note to clients that the deal "will have a ripple effect for the company's cloud business for years to come."


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