FULL INTERVIEW: Microsoft's Brad Smith talks data centers, the Millionaires Tax and affordability

[00:00:00] Speaker 1: You know, there's been a lot of criticism in the last decade, whether it's Amazon or Microsoft, that there's not enough done in the community. How do you put this on a platform to suggest this is the kind of thing that Microsoft does in the community? [00:00:11] Speaker 2: Well, we always ask ourselves what more can we do, and every day I think there's something more, something we can do better. But the reality is this region is unusual. When you look at Microsoft and Amazon together, we've put more than a billion and a half dollars into affordable housing, two private companies using shareholder resources to support affordable housing. We've supported more than 16,000 from Microsoft alone. You know, we've literally spent hundreds of millions of dollars for the light rail on the east side for infrastructure. The philanthropic work we do, I think, isn't known by as many people as I wish were aware. But there is no company literally in the history of business that has provided as much philanthropic funding to nonprofits as Microsoft, and so much of it is fueled by our employees. We provided more than $1.9 billion to nonprofits in this state. We do a lot. We live here. We like to say we give where we live. It's part of what we strive to make, being a good part of this community. [00:01:21] Speaker 1: And you've given in Quincy, Washington. You and I have talked about that with the data center there and the circumstances with how they've been able to build a new school and a new police station and a fire station, a new hospital, and how a lot of people in Quincy are happy with data centers. But you saw what happened in the election. People across the country, not so happy with data centers. Ohio, there was 10 different votes against them. What do you make of the landscape right now with data centers, knowing they are important to Microsoft's future? [00:01:51] Speaker 2: What I would say is everyone who wants to build a data center has to do it responsibly. I think that's the message. We do polling ourselves, and basically what it shows in Washington state and around the country is there's about 15% of the public that says, hey, go ahead and build. We're not going to worry about it. There's about 15% who say we don't want to see a data center built under any circumstances. But most people, about 70% typically say, I want to see data centers built responsibly. And they're clear on what that means. They don't want to see data centers increase the price of their electricity bill. They don't want it to take water out of the community. They don't want it to create noise that disrupts their way of living. They're right. These are the right things for people to be focused on. When I look at our 20-year track record in Quincy, I think it offers a model, at least in substantial part, about how one can partner with a community. I love going to Quincy. Not only is it a beautiful part of the state, but you just see what a difference it is. I mean, Grant County, Quincy, they've grown faster than Seattle the last 20 years. The poverty rate's been cut in half. The property taxes that people pay has fallen, but property tax revenue has grown 12-fold, basically because of data centers. That's why if you want to see what I think might be the nicest high school in Washington state, drive to Quincy. And you see a new medical center, a new fire station, a new police station. And we've really tried to honor people's way of life. When we started 20 years ago, Quincy, Washington, had one traffic light. Now it has two. So there are ways to do this. We all, I just think, have to say we're going to work hard every day to earn the trust that we want people to give us. [00:03:50] Speaker 1: Does the pushback on a national level change any sort of strategy for Microsoft going forward? [00:03:55] Speaker 2: I just think we're going to have to do two things. One is just keep doubling down on being a great part of every community. We're in 19 communities in 16 states today. We need to know a lot about every one of them. I memorized them all. But I think more than that, we are going to see more legislation. We're going to see state legislation across the country. We're going to see federal legislation across the country. I don't know how many of those bills will pass. But I think at some level, the best thing for our industry to recognize is usually to give people confidence that things will be done in a responsible way. There is a role for good laws. And I think if laws emerge that require that everybody do this work in a responsible way, I think that might be part of the solution. Because I think we need a solution, a solution that brings everybody together and addresses questions that I think are on people's minds and they're questions that people are right to ask. [00:04:57] Speaker 1: And on a state level, you and I talked at the waterfront with a big announcement in advance of the election with Governor Gregoire. And there's been some legislation that's been passed or an initiative that was rejected, the millionaire's tax. And you and I talked there about a payroll tax. There's also been discussion about what the governor said behind closed doors about you and the political action committee. So what's your what's your reaction to all of this stuff that we saw on a statewide level, too, and how that impacts Microsoft? [00:05:29] Speaker 2: Well, first, I think we need to acknowledge the obvious. The public has voted. It's offered its point of view and that tax has been upheld. So unless there's something from the Supreme Court, we should all assume it's going to become part of Washington state law as we go forward. I think what we really need to do is get to a stable budget situation in Olympia. We've seen multiple large tax increases in recent years. You know, fundamentally, I think everybody in the state worries about affordability. We do. Our employees do. Everybody does. We also need to recognize that when taxes rise on businesses, businesses inevitably pass those costs on to consumers. And so ongoing tax increases are making the state less affordable. What I hope is that we can all come together in twenty twenty seven. The new session will begin in January and let's get to a point where we can look in the rearview mirror and say, look, after trying to digest the biggest tax increases in the state's history, let's be on a path to stability, more predictability and an easier ability for people to create jobs in this state and help to make the state more affordable. [00:06:49] Speaker 1: Have you the governor talked? [00:06:51] Speaker 2: Oh, I saw him last week. He was at Microsoft hosting his economic development council. And I'm one of the many folks on it. So he was here. It was good to see him. It's always great to have him on our campus. [00:07:02] Speaker 1: So all good there, despite what was said behind closed doors? [00:07:05] Speaker 2: Look, we have long worked with Bob Ferguson. We work with him as attorney general. We work with him as governor. I think the state is fortunate to have him as a governor. I look forward to working to support him. I especially look forward to working with him and our leaders in Olympia. Let's go forward in a way that really focuses on budget stability, affordability for our people, the creation of new businesses and jobs for our economy. If we can all agree on those goals, I think that is a path that can bring people together. And I think we need to bring people together.