microsoft ethics case study

Legal Compliance and Ethics at Microsoft

Our commitment to corporate responsibility and integrity

Empower every person and every organization on the planet to achieve more

Our commitment to corporate responsibility and integrity guides everything we do as a company and defines the work of our ethics and compliance program. We have high ethical standards governing the way we conduct our business, standards that we also apply to our suppliers and business partners. Our business practices and standards reflect our commitment to making a positive impact around the globe. We demand such high standards from ourselves and our partners to preserve trust with our customers, governments, investors, partners, representatives, and each other, and because it is the right thing to do.

Program overview

We built our compliance and ethics program on three pillars: Prevention, Detection, and Remediation. We continually evolve our programs to meet these goals.

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To prevent compliance issues from arising in the first place, we focus on promoting a culture of ethics and integrity. We do this through creating a culture of compliance throughout our company, and through our Standards of Business Conduct, policies, and training, while also using data analytics, risk assessment, proactive investigations, third party vetting, and other compliance efforts to minimize potential risks.

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We detect potential legal compliance issues in several ways, including testing by our Internal Audit group, monitoring through our compliance analytics program and by our Controls & Compliance teams, investigating concerns reported by employees and others, and analyzing trends through our Compliance and Ethics team. Compliance is a team effort at Microsoft. Every employee is responsible for upholding our standards, fostering the culture of compliance in their Microsoft team and partners, and reporting concerns.

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Remediation

We strive to assess the root cause of problems, and continually enhance our controls and processes to minimize the risk of recurrence. This process is a core component of our compliance program and growth mindset culture. We discipline employees who violate our policies and standards, regardless of their level, and we prohibit doing business with partners and suppliers who don’t meet our ethical standards.

Our Trust Code

We achieve our mission by building trust with people and organizations around the globe. Our goals are only possible when people trust Microsoft and trust our technology.

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How we build trust

We achieve more when we apply our culture and values to build and preserve trust with our customers, governments, investors, partners, representatives, and each other. Employees who violate our standards face disciplinary action, up to and including termination of employment. Our policies make anyone who engages in retaliation against someone for raising a compliance concern subject to disciplinary action up to and including termination of employment.

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Microsoft Standards of Business Conduct - our Trust Code

Our Trust Code reflects our culture and values, and the principles that guide our behavior. Our employees use these standards to understand what is required of them, get help when needed, and make good decisions that build trust and empower our customers and partners to achieve more.

More about our program

Reporting concerns and non-retaliation.

Our commitment to building and maintaining a culture of trust, ethics, and integrity depends on our employees and representatives telling us if they are aware of, or have a concern about, compliance with our Standards of Business Conduct, policies, or the law.

Again, our policies prohibit retaliation. Employees will not suffer adverse consequences or retaliation for:

Refusing to do something that violates the Microsoft Standards of Business Conduct, policies, or the law, even if this refusal results in the loss of business to Microsoft.
Raising a concern about potential misconduct in good faith, or for cooperating with an investigation.

Our policies make anyone who retaliates against an employee for engaging in any of these activities will be subject to disciplinary action, up to and including termination of employment or business relationship.

We provide multiple ways to report concerns. When you report a concern or issue, you can expect that your report will be treated seriously, fairly, and promptly.

Administration and oversight

The Vice Chair and President serves as our Chief Compliance Officer and has overall responsibility for the management of our compliance and ethics program. He reports directly to the CEO and, for this purpose, also directly to the Audit Committee of Microsoft’s Board of Directors. The Vice Chair and President, through the Vice President and Deputy General Counsel of Compliance and Ethics, oversees the Compliance and Ethics team. The Deputy General Counsel has direct access and reporting obligations to the Audit Committee.

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How Microsoft’s Legal Legacy Shapes the Antitrust Case Against Google

Lawyers for the Justice Department and Google as well as the judge in a monthslong trial have invoked the landmark case against Microsoft from the 1990s.

Judge Amit Mehta, wearing a muted orange-patterned tie, speaking behind a lectern and gesturing with his hand.

By Steve Lohr

Steve Lohr covered the Microsoft antitrust trial.

Antitrust trials are full of long stretches of detailed, often tedious testimony punctuated by telling moments. In the two-month Google antitrust trial that is nearing its conclusion, one of those moments came in a brief exchange in October.

While cross-examining a witness for the Justice Department, John Schmidtlein, Google’s lead trial lawyer, tried to describe how this suit differed from the landmark antitrust case brought against Microsoft in the 1990s. The barriers to competition in search today, Mr. Schmidtlein said, are less daunting than Microsoft’s stranglehold on personal computer software.

The judge cut him off. “Let’s move on,” said Judge Amit P. Mehta, who wrote in an opinion earlier in the year that he would use the Microsoft case as a guiding framework. “I think I can figure out what the Microsoft case was about.”

The antitrust fight against Microsoft in the 1990s has loomed over the government’s showdown with Google. The Justice Department and a group of states say the search giant is running the Microsoft monopoly playbook, just in a different tech market, while Google argues that it is hardly as powerful as Microsoft was back in the day.

The Microsoft antitrust case is also the lone example of the government’s embarking on — and winning — a sweeping suit against a tech giant for illegally protecting its monopoly. Microsoft combined old-style practices, like bullying industry partners to stifle competition, with newer ideas in economics.

One of those new ideas included the dynamics of digital markets, which reinforce the power of a dominant company. In tech markets, there can be a powerful “network effect” as a product or service becomes more valuable as more people use it, attracting still more users and investment. Once on a digital platform, users tend not to switch. These concepts of digital platform economics are crucial to the Google case.

While the eventual ruling by Judge Mehta, who was appointed by President Barack Obama, will hinge largely on his assessment of the facts and evidence presented in the trial, his decision must also be built on the precedents established by previous cases.

“Microsoft is his legal road map,” said Andrew I. Gavil, an antitrust expert and law professor at Howard University.

Testimony in the trial, which began in September, is expected to end by Thanksgiving. A ruling by the judge — a bench trial, without a jury — will come next year.

The government’s argument focuses on the power of data and the notion that the search business is an accelerating flywheel, which becomes an insurmountable barrier to rivals. More users generate more data to train Google’s search algorithms, improving the quality of its search, attracting more users and advertisers.

Data does matter, Google’s lawyers have said, but it has diminishing returns. Microsoft’s Bing, for example, has plenty of data, but Google is the runaway leader in search, it says, because of its greater investment in smart people to create better software. Its defense has largely been a parade of company engineers and executives testifying to the time, work and money that go into improving its search engine.

In another echo of the Microsoft antitrust fight, contracts that Google signed with other tech companies to protect its business have emerged as a key part of the trial. In both cases, the government said the contracts were illegal.

Microsoft’s contracts were deals with personal computer makers and internet services to not offer browsing software from Netscape, the early leader. Microsoft feared that the browser — a layer of software on top of Microsoft’s operating system — could undermine the powerful hold its Windows software had on the tech industry.

The Microsoft contracts were take-it-or-leave-it deals. PC makers worried that Microsoft might refuse to give them access to its Windows desktop software or charge them more for it. Windows dominated the PC market and served as the gateway to the internet before smartphones.

Google’s contracts are different. They involve big payments to Apple, Samsung, Mozilla and others to make Google the featured search engine on their devices and browsers. Google paid $26.3 billion for such pay-for-default deals in 2021, the company disclosed in testimony. The government argues that Google paid so much to illegally exclude competitors and potential rivals, effectively buying much of the search market and hoarding still more data.

“So Google did it with carrots instead of sticks,” said Harry First, an antitrust expert at the New York University School of Law. At one point in the trial, Judge Mehta called the default payment deals the “heart of the case.”

Google argues that it competes fairly for the default deals, that its payments to device makers can lower costs to consumers, that it makes it easy for users to switch search engines — and that its grip on the market pales in comparison with Microsoft’s chokehold in the PC era.

Antitrust experts add that Microsoft’s campaign was mainly intended to stifle a potential rival, and that it had little pro-competitive justification for its acts.

“The conduct was harsher in Microsoft; it’s more subtle with Google,” said Herbert Hovenkamp, a professor at the University of Pennsylvania’s Carey Law School.

If the government and states prevail in the Google case, the question becomes: What will Judge Mehta determine is the appropriate remedy?

The remedy phase comes after a judge decides there has been a violation, and then determines what action should be taken to try to restore competition. That could involve another round of court hearings, with testimony from both sides.

Banning the pay-for-default deals would be an obvious step, and that would mirror the outcome in the Microsoft case. In the end, Microsoft was prohibited from making exclusive deals that thwarted competition and was ordered to disclose more technical information to potential rivals.

There are already calls for stronger sanctions to encourage competition this time. Tim Wu, a professor of law at Columbia University and former technology policy official in the Biden administration, calls for ordering Google to spin off its Chrome browser, a major distribution channel for its search engine, in addition to outlawing Google’s payment deals.

Yet Judge Mehta would necessarily be guided by legal precedent — and by Microsoft most of all.

“The government has crafted this case to look as much like Microsoft as they could,” said Mr. First of New York University. “To push the boundary in the remedy phase would be a real challenge.”

An earlier version of this article misspelled the surname of an antitrust expert and law professor at Howard University. He is Andrew I. Gavil, not Gavel.

How we handle corrections

Steve Lohr covers technology, economics and work force issues. He was part of the team awarded the Pulitzer Prize for explanatory reporting in 2013. More about Steve Lohr

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Microsoft's Ethical Reckoning Is Here

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Microsoft has become the latest company dragged into the tech industry’s ethical reckoning over the use of its products by government agencies.

On Sunday, critics noted a blog post from January in which Microsoft touted its work with US Immigration and Customs Enforcement (ICE). The post celebrated a government certification that allowed Microsoft Azure, the company’s cloud-computing platform, to handle sensitive unclassified information for ICE. The sales-driven blog post outlined ways that ICE might use Azure Government, including enabling ICE employees to “utilize deep learning capabilities to accelerate facial recognition and identification,” Tom Keane, a general manager at Microsoft wrote. “The agency is currently implementing transformative technologies for homeland security and public safety, and we're proud to support this work with our mission-critical cloud,” the post added.

The post resurfaced amid outrage over ICE’s role in forcibly separating families soon after they arrive in the US, with some children detained in cages. Critics lambasted Microsoft on social media, asking the company to discontinue its work with ICE. Yasha Levine, author of the book Surveillance Valley , says scrutiny of tech companies needs to extend beyond “the splashy Terminator-like stuff” and “look at the more routine and mundane integration of Silicon Valley tech with military and law enforcement. There is so much of it.”

Some of the criticism of Silicon Valley companies working with the government is rooted in specific Trump administration policies. Levine says US Customs and Border Protection uses Google Maps. “Does that make Google complicit in Trump’s immigration policies? I say, yes,” he says. But he notes that government agencies used Google Maps during the Obama administration as well.

Niles Guo, a former product manager at Microsoft, urged the company to do better. “The projects we take on matters[sic], they have real world implications,” Guo wrote on Twitter . “We can’t hide behind code without thinking about the ethical implications of our work.”

Microsoft intern Courtney Brousseau tweeted at Microsoft CEO Satya Nadella. “[A]s a current @Microsoft intern, I’d also like to know why Microsoft is ‘proud to support (the work of ICE).’”

Tech Workers Coalition, a labor group for tech industry employees, urged Microsoft employees to coordinate their opposition. “If you are a worker building these tools or others at Microsoft, decide now that you will not be complicit,” the group tweeted .

Azure is Microsoft’s brand name for its cloud computing services, which can range from hosting a customer’s data to facial recognition. Late Monday, Microsoft said it is “not working with U.S. Immigration and Customs Enforcement or U.S. Customs and Border Protection on any projects related to separating children from their families at the border, and contrary to some speculation, we are not aware of Azure or Azure services being used for this purpose.”

The company also decried policies that lead to separating families. “As a company, Microsoft is dismayed by the forcible separation of children from their families at the border,” the statement said. “We urge the administration to change its policy and Congress to pass legislation ensuring children are no longer separated from their families.”

Before releasing the statement, Microsoft temporarily deleted four paragraphs about its work with ICE from the January blog post. The company initially told WIRED the deletion was “a mistake,” but later described it as an error in judgment.

The backlash against Microsoft underscores the shifting moral boundaries for tech companies, which have worked closely with defense and military since the advent of Silicon Valley. Tech employers began to pay attention once engineers organized to publicize their objections, beginning with a pledge not to build a Muslim registry soon after President Donald Trump’s election.

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Most of the recent debate has been around uses of artificial intelligence to identify objects in video footage from drones, or to identify people through facial recognition. In recent months, more than 4,000 Google employees signed a petition objecting to the company’s work on Project Maven, which seeks to apply AI to the military. Internal objections have been buttressed with external support from academics, researchers, and shareholders. On Friday, Amazon shareholders , including Arjuna Capital, Zevin Asset Management, and the Social Equity Group, published an open letter asking CEO Jeff Bezos to halt expansion or development of Rekognition, Amazon’s image-recognition software, for use in government surveillance until it can be vetted by Amazon’s board of directors. Following reports that Amazon marketed Rekognition to police departments, consumers and advocacy groups also asked Amazon to take Rekognition off the table for governments.

For some, Project Maven crossed a line by weaponizing artificial intelligence. Others are not as certain. On one side of the debate, supporters of Silicon Valley’s work with the government on border walls or drones argue that better technology can keep Americans safer. Wouldn’t you rather Google handle facial recognition than Lockheed Martin? But when the companies supporting that kind of defense work also collect vast troves of personal information, it raises questions about whether there are protections for consumer privacy. Amazon declined to comment. Google did not respond to a request for comment.

In Google’s case, employee protest, coupled with a letter of support from leading academics working in AI, made an impact. Earlier this month, CEO Sundar Pichai announced that Google would not renew its Project Maven contract when it expires next year, but said Google would continue its work “with governments and the military in many other areas.”

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Module 6: Business Ethics and Corporate Social Responsibility

Case study: microsoft’s gift to bloggers, learning outcomes.

Define bribery
Give examples of unethical corporate or business behavior

Gift giving in business is both commonplace and controversial at the same time. Business gifts are usually seen as an advertising, sales-promotion, and marketing-communication medium. Such gifting is usually practiced for the following reasons:

In appreciation for past client relationships, placing a new order, referrals to other clients, etc.
In the hopes of creating a positive first impression that might help to establish an initial business relationship
As a quid pro quo — returning a favor or expecting a favor in return for something

Making good decisions about when business gifts are appropriate is extremely complex in the United States. In a global business environment, it becomes one of the most challenging ethical issues, since the cultural norms in other countries can be at odds with standard ethical practices in the United States. For this reason, gifts and bribes warrant a deeper discussion.

Let’s examine one of Microsoft’s promotions that included a gift.

Microsoft Gives Acer Ferrari Laptops to Bloggers

When Microsoft introduced its Vista operating system, the launch included a noteworthy promotion. During the 2006 Christmas season, Microsoft sent out 90 Acer Ferrari laptops, loaded with Windows Vista Operating system, to approximately 90 influential bloggers .

Different bloggers received different machines, but the lowest model was worth around two thousand dollars. Michael Arrington, Editor of TechCrunch, shared the message that accompanied his gift:

This would be a review machine, so I’d love to hear your opinion on the machine and OS. Full disclosure, while I hope you will blog about your experience with the PC, you don’t have to. Also, you are welcome to send the machine back to us after you are done playing with it, or you can give it away to your community, or you can hold on to it for as long as you’d like. Just let me know what you plan to do with it when the time comes. And if you run into any problems let me know. A few of the drivers aren’t quite final, but are very close. [1]

Clearly, Microsoft was hoping to encourage reviews of Vista and wanted to make sure that the bloggers experienced Vista on a high-end machine that would optimize performance. Did they also hope to influence the bloggers’ opinions of the company along the way?

Sending the gift to bloggers was a risky marketing tactic even without the ethical question. Culturally, bloggers are a highly influential group of people with strong opinions, which they share openly to a wide audience. Many of the recipients reacted to the gift by sharing the news of the promotion and their opinions about it. A broad range of ethical issues emerged from the discussions in the blogosphere. Below are several excerpts.

The Gifts Diminish Trust in the Reviewers

Now that I know these guys (any gals?) have access to a tailored laptop, preloaded, etc., I know their wisdom is no longer that of The Crowd—I suspect it is going to be tainted (even if not the case), so I have already discounted them. And, since I don’t know who has and has not had the gift, I will distrust them all on this subject! [2]

The Laptops Provide a Review Experience That Will Not Match Users’ Experiences

If you’ve ever tried to add a new Microsoft OS to an existing computer, you know you can’t do that without totally f****** up your computer. The only way to switch to a new Microsoft OS is to start with a new computer. And, of course, to wait a year or two while they get the kinks out. Microsoft wouldn’t chance having dozens of bloggers writing about how VISTA screwed up their computers, so they installed the system on brand-new computers. They gave the computers as gifts instead of lending them to the bloggers for review, which is the norm when dealing with traditional journalists.

The Bloggers Should Disclose the Gift in Their Reviews

Microsoft’s approach raises some problematic issues . . . How many bloggers have received a notebook but have not declared it on their blog? Quite a few, I suggest, which highlights the fundamental problem with blogging, which is that bloggers are not trained journalists and not necessarily in tune with the ethical problems that gifts entail . . . Finally, sending bribes to bloggers is not a good look for Microsoft, and this is exactly how this initiative will be perceived. Even as they try to defend themselves, Microsoft’s PR gurus show that they do not understand the blogosphere. [3]

Another blogger shared the disclosure concern while supporting the promotion:

That is a GREAT idea. After all, how can anyone have a decent conversation about Windows Vista without having put a bunch of time on one of the machines? Now, regarding blogger ethics. Did you disclose? If you did, you have ethics. If you didn ’t, you don’t. It’s that black-and-white with me. [4]

While there was not a clear consensus on the ethics of this promotion, the debate drowned out whatever little positive opinion Windows Vista had generated in the blogs. The Microsoft case stands as a good example of a business gift program gone wrong. The company not only wasted the money spent on the gifts (none of the bloggers reported to have returned the laptops) but suffered weeks of bad press—and soured the commercial launch of the product.

Three Dimensions of Evaluating Gifts

The Microsoft example provides a three-dimensional framework by which to evaluate whether a gift crosses the line into bribery. (Remember that a bribe is something given to induce someone to alter their behavior—in this case, to write a favorable product review.) The framework helps establish guidelines for keeping business gifting aboveboard.

The chief problem with Microsoft’s gift was the content. Content refers to the nature of the gift itself (a shiny, new, top-of-the-line laptop) and the price ($2,000 or more). The company claimed that such a high-end machine was necessary to showcase the full capability of the Windows Vista operating system. And, they asserted, since the bloggers were given the option of returning the laptops (or giving them away), the issue of bribery didn’t come into play, and the onus of acting ethically fell to the recipients.

Nonetheless, Microsoft’s actions represented a departure from standard industry practice of sending preview disks of software to opinion-makers. While it might be acceptable to give out $2,000 gifts in other industries (like sending out expensive fashion clothing to movies stars), and one can bicker about whether $2,000 is or isn’t too extravagant, the point is that Microsoft broke with the conventions of its own industry.

The key lesson is that what is being given defines the nature of gifting, and extreme care must be taken to determine whether that gift is appropriate. While the market price of a gift item can be used as a benchmark, the type of gift is as important as its price. If Microsoft had given out $2,000 worth of software, it wouldn’t have been so controversial. Another point, which Microsoft surely knew, is that items sent around Christmas time are more apt to be perceived as gifts.

The other objection to the Microsoft gifts was the company’s motives for giving them. People argued that Microsoft sent the expensive laptops to bloggers as a quid pro quo . Though the accompanying email said, “you don’t have to write about Vista,” that was mainly a legal disclaimer meant to protect Microsoft against formal bribery charges (U.S. corruption law prohibits corporate gifts designed to induce action by the recipient). The company may have kept itself out of legal hot water, but it remained vulnerable to the charge that it tried to exert psychological pressure on the bloggers to write about their “pleasurable” experiences with Vista.

The other argument was that laptops were given to the bloggers so that they would lack the proper testing environment of mainstream tech journalists. The bloggers were set up to write good things about Vista by seeing it function in a brand-new machine, tuned and tested for this purpose by Microsoft engineers. The experience of actual users—who might be influenced by these bloggers ’ opinions—would be different, since they would have to install the software on older machines with no help from Microsoft. Critics argued that the company’s promotion was intended to create a false opinion of the market.

While most businesses define what is a bribe and what isn ’t in terms of the content of the gift, in most countries, the matter is decided on the basis of context . So, regardless of the size, type, and value of the gift, if it can be established that the gift was given with the intent to induce an action, then it will be regarded as a bribe. The lesson here is that it isn ’t enough for businesses to set clear value/type limits on corporate gifts; it’s also necessary to scrutinize the motives behind the gift giving, think carefully about how the gift will be received, and stop short of anything that induces the recipient to cross the line of ethical behavior.

Other critics held that Microsoft’s blunder was not caused by the content or context of the gifts, but that the company fundamentally misunderstood the culture of blogging. This view came primarily from marketing practitioners, who pointed out that giving the laptops to elite bloggers violated the egalitarian and sponsorship-free nature of social media. It’s a culture whose members loathe any kind of commercial taint to their independence and are highly sensitive to charges of “selling out.”

Thus, culture is clearly the third very important aspect of gift giving. It’s crucial to establish clear boundaries and protocols so that gifts are truly received as gifts—not as attempts to influence. To do that means factoring in the recipient’s mindset and culture, since what may be perceived as a gift in one group may seem like a bribe in another. The “cultural” dimension is easily understood in personal gift giving (a toy truck might be an excellent present for your six-year-old nephew, but it wouldn’t be appropriate for your boss or grandparent). Yet, somehow the idea of discretionary gift giving hasn’t gained much ground in business. However, understanding the cultural preferences of the receiver is obviously an important issue in international business.

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O'Brien, Keith By Keith O'Brien. "Microsoft Vista Blogger Campaign Causes Controversy." PR Week. December 29, 2006. Accessed June 24, 2019. http://www.prweek.com/article/1259420/microsoft-vista-blogger-campaign-causes-controversy . ↵
Patrick, Alan. "Why Giving Ferraris to Bloggers Is a Bad Idea." Broadstuff. December 28, 2006. Accessed June 24, 2019. http://www.broadstuff.com/archives/97-Why-giving-Ferraris-to-Bloggers-is-a-bad-idea.html . ↵
Cnet Staff. "Microsoft Doesn't Know When to Stop." CNET. January 01, 2007. Accessed June 24, 2019. http://www.cnet.com/news/microsoft-doesnt-know-when-to-stop/ . ↵
Scoble, Robert. "I Think the Microsoft Vista Giveaway Is an Awesome Idea." Scobleizer. December 27, 2006. Accessed June 24, 2019. http://scobleizer.com/2006/12/27/i-think-the-microsoft-vista-giveaway-is-an-awesome-idea . ↵
Revision and adaptation. Provided by : Lumen Learning. License : CC BY-NC-SA: Attribution-NonCommercial-ShareAlike
Sunday Posts Blog. Authored by : Supriyo Chaudhuri. Located at : http://sundayposts.blogspot.com/2008/10/when-does-business-gift-become-bribe.html#.VoARN5OAOkq . Project : When Does Business Gift Become A Bribe: A Marketing Policy Perspective. License : CC BY-NC-SA: Attribution-NonCommercial-ShareAlike
Acer Ferrari One. Authored by : Masaru Kamikura. Located at : https://www.flickr.com/photos/kamikura/3976320866/ . License : CC BY: Attribution

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CASE STUDY: How Satya Nadella overhauled Microsoft's cutthroat culture and turned it into a trillion-dollar 'growth mindset' company

Lehtikuva, Markku Ulander/AP Photo; Yuri Gripas/Reuters; Fabrizio Bensch/Reuters; Ruobing Su/Business Insider

Satya Nadella is the CEO of Microsoft. Steve Ballmer and Bill Gates are the former CEOs.

Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.
Click here for more BI Prime content.

A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions.

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon - drawn in 2011 by a Google employee named Manu Cornet , no less - made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion. The company has shifted from a has-been to a cloud powerhouse.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset .

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset - and how they predict success - was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture.

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella.

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014.

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition - it only respects innovation," Nadella wrote on Feb. 4, 2014, in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow.

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed.

Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others."

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it.

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Adopting a growth mindset can be uncomfortable, he said.

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset - the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth - Lee was recently named to the National Academy of Medicine - and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech.

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company - at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce - which competes directly with Microsoft's customer-relationship-management Dynamics 365 product - in order to ink a big cloud deal that was good for the company overall.

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices - often significantly - when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. In February, a judge ruled that Microsoft must stop working on the contract.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work."

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company."

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring - and retaining - a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and more recently, some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Tamblyn helped oversee the release of the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations.

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

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30 Apr 2024

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The Vulnerability Disclosure Debate

Markkula Center for Applied Ethics
Focus Areas
Business Ethics
Business Ethics Resources

The debate over “responsible” disclosure of software vulnerabilities has been a mainstay in the security space.

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Introduction

The debate over “responsible” disclosure of software vulnerabilities has been a mainstay in the security space. In 2015, new fuel was added to the fire as Google disclosed a Microsoft Windows vulnerability, along with exploit code, two days before the scheduled patch. (Exploit code is the stretch of code that hackers can exploit to hack software.) And in 2018, the debate came back into the forefront with the infamous Intel Spectre and Meltdown chip problems.

The Google-Microsoft conflict highlights the issues that can arise between companies around disclosure. The Spectre and Meltdown flaws show how vulnerabilities can pit companies against the U.S. government and consumers.

Company v. Company Disclosure Debate

In 2015, the bug was found by Google’s in-house security research team, which searches for vulnerabilities in Google software, as well as that of other vendors, including Microsoft. Upon finding a vulnerability, Google adheres to a strict 90-day policy: Vendors are notified of the bug, and a public disclosure is automatically released 90 days after, regardless of whether the bug has been addressed.

Microsoft initially asked for an extension beyond the 90 days, which was denied by Google, as was a request to extend the disclosure date to the first “Patch Tuesday” of the month (the second Tuesday of the month, and preferred release date for patches for developers).

Microsoft criticized Google in a blog post, accusing the company’s decision of being a “gotcha” opportunity, and at the expense of the users, who were at risk for the two days between the disclosure and the patch release. Microsoft reiterated its support for “Coordinated Vulnerability Disclosure,” which calls for security researchers to work closely with developers in ensuring a fix is released before the public disclosure.

Google, and supporters of similar disclosure policies, argue that firm disclosure dates prevent developers from sweeping vulnerabilities under the rug, and should strike a balance between the public’s right to know and providing the developer a chance to fix the problem. Many take an even harder stance and propose that immediate public disclosure is the best policy.

Shortly after this incident, Google released an additional update on three Microsoft vulnerabilities.

Discussion Questions

What should Google and Microsoft have done differently, if anything?
Did the release unnecessarily put users at risk, or is it in the best interest of users in the long run for Google to stick to its disclosure policy?
Is Google’s firm, 90-day policy fair? Or should it be willing to adjust depending on the situation?
Did Microsoft adequately respond? Is sticking to “patch Tuesday” enough of a reason to wait to release the patch?
Should Google have published the exploit code?
What obligations do security researchers have, or are they free to publish their work as they please?

Companies v. US Government and the Public Disclosure Debate

In 2017 and 2018, there was another high profile case of questionable vulnerability disclosure practices known as the Spectre and Meltdown chip flaws. In January of 2018, Intel revealed that millions of their computer chips were vulnerable to hacking; however, Intel did not go public with this information when they discovered it in June of 2017. Instead, Intel told select vendors about the problem (Huawei, Google, Alibaba, and Lenovo, etc.) while they worked behind the scenes to fix it.

In this case, certain companies were working together to address the problem, but in July of 2018, several U.S. Senators pointed out that companies with close Chinese government ties knew about the vulnerability before the U.S. government did, putting national security and consumers’ security at risk.

Did Intel make the right decision to keep the Spectre and Meltdown vulnerabilities from the U.S. government and the public?
Do companies have more of an ethical obligation to disclose vulnerabilities to the government and to the public than they do to direct competitors?
Would immediate public disclosure of such vulnerabilities be a good best practice?

Originally written in 2015. Updated in 2018.

4 lessons on designing responsible, ethical tech: Microsoft case study

Image: Photo by Markus Spiske on Unsplash

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Stay up to date:, sdg 12: responsible consumption and production.

Responsible innovation begins with culture change and the proper tools.
Microsoft deployed everything from new sets of principles to role-playing exercises and employee performance goals to help develop AI that's more responsible and inclusive.
Aligning workforces on responsible innovation goals can help track progress towards standardization within a company.

Despite their best intentions, there’s often a gap in businesses between the desire to act ethically and following through on those good intentions.

We call this the intention-action gap . Closing this gap is key to ensuring technology is developed in a more responsible, inclusive manner.

To help close the intention-action gap, the World Economic Forum recently embarked on a project to unearth tools, processes, and lessons from organizations that have made progress in operationalizing ethics in technology. This project, studying Microsoft's journey to operationalize its responsible innovation practices among its more than 145,000 employees, considered the evolution of the company’s culture, the tools and processes it created, and the efficacy these of efforts.

Insights from this research were collected in a report titled Responsible Use of Technology: The Microsoft Case Study jointly authored by the World Economic Forum and the Markkula Center for Applied Ethics at Santa Clara University. The top four lessons from this research are summarized below.

The World Economic Forum was the first to draw the world’s attention to the Fourth Industrial Revolution, the current period of unprecedented change driven by rapid technological advances. Policies, norms and regulations have not been able to keep up with the pace of innovation, creating a growing need to fill this gap.

The Forum established the Centre for the Fourth Industrial Revolution Network in 2017 to ensure that new and emerging technologies will help—not harm—humanity in the future. Headquartered in San Francisco, the network launched centres in China, India and Japan in 2018 and is rapidly establishing locally-run Affiliate Centres in many countries around the world.

The global network is working closely with partners from government, business, academia and civil society to co-design and pilot agile frameworks for governing new and emerging technologies, including artificial intelligence (AI) , autonomous vehicles , blockchain , data policy , digital trade , drones , internet of things (IoT) , precision medicine and environmental innovations .

Learn more about the groundbreaking work that the Centre for the Fourth Industrial Revolution Network is doing to prepare us for the future.

Want to help us shape the Fourth Industrial Revolution? Contact us to find out how you can become a member or partner.

1. Responsible innovation begins with culture change.

When Satya Nadella became the CEO of Microsoft in 2014, he brought the "Growth Mindset" approach with him. This approach, developed by researcher Carol Dweck, considers how thinking influences human endeavours. With this mindset came an environment for introspection, innovation, and learning that allowed the company’s culture to more deeply consider the impacts of its technology on society.

This approach was put into practice after a tech and PR crisis. In 2016, Microsoft released an AI-powered chatbot on Twitter called "Tay," which was maliciously attacked to respond with inappropriate and denigrating comments. While another company may have sought blame or redirected the responsibility for this incident, Microsoft issued a public apology. The organization and its employees saw an opportunity to grow from this experience and operationalize ethics in AI at many company levels.

This effort led to the development of Microsoft's Responsible AI Principles, a set of foundational guideposts established in 2018. Microsoft operationalized these principles across the company by creating a governance structure borrowing from the hub-and-spoke model proven successful at integrating privacy, security and accessibility into its products in the past.

That hub includes three internal teams. They include:

AI, Ethics, and Effects in Engineering and Research (AETHER) Committee - providing scientific and engineering advice and expertise on the enactment of the responsible AI principles;
The Office of Responsible AI (ORA) - tasked with the policy governance, sensitive use and education functions; and
The Responsible AI Strategy in Engineering (RAISE) group - enabling engineers to implement responsible AI tools and systems.

Serving as spokes in this governance model are the Responsible AI Champs. These Champs, embedded throughout the company, are domain experts who advise, assist, and raise awareness on Microsoft's responsible AI approach.

Additionally, Microsoft also created the Responsible AI Standard, which outlines a set of steps that teams at the company must follow to support the design and development of responsible AI systems. These efforts provide an example of the sort of thoughtfully-designed governance model that must be in place to support culture change and to operationalize ethics in technology.

2. Tools and techniques ease implementation.

In any change management initiative, tools make it easier for individuals to modify their behaviour. This hold true for operationalizing ethics in technology as well.

As professions such as data science and machine learning (ML) are still in their infancy, tools make it easier for practitioners to explain data science models' performance, improve the fairness of algorithms, and identify ethical issues critical to operationalizing responsible AI.

Microsoft's technical tools such as InterpretML, Fairlearn, and Error Analysis represent significant contributions in this area. Specifically, InterpretML makes it easier for practitioners to better interpret and explain behaviours in a ML model. Meanwhile, Fairlearn helps data scientists assess and improve the fairness of machine learning models. Lastly, Error Analysis makes it easier for data scientists to identify cohorts with higher error rates than benchmarks and improve accuracy in their models. Each of these tools provide users with dashboards that make it easier visualize model performance.

However, our research found that tools that help teams to construe their work ethically are also key to helping to change behaviours. For Microsoft, these come in the form of Impact Assessments, the Envision AI Workshop, the Judgment Call game, and Community Jury. These tools help teams consider their products' potential consequences using checklists, role-playing exercises, and stakeholder engagement, respectively. With these tools in place, it’s easier for product teams to build greater empathy for stakeholders affected by their technology who are often underrepresented in the technology industry.

3. Alignment and measuring impact create accountability.

Many companies evaluate employee performance by how those staffers uphold their company’s values. For any company looking to operationalize ethics in technology, they must extend this practice to evaluating and measuring employee performance against the firm’s ethical technology principles.

Aligning Microsoft’s thousands of employees on responsible intelligence principles began with the Cognition team, a group that works on products enabled by augmented reality/virtual reality, computer vision and artificial intelligence technologies.

Cognition team members met with their managers during their bi-annual goal setting and performance evaluation exercise to create a shared goal to implement responsible AI personalized to their role in the organization. This system, now being rolled out to other teams , enables Microsoft to create alignment and accountability around its responsible AI efforts while measuring each employee's impact.

4. Responsible products are better products.

Through responsible innovation, ‘better’ products can be developed – products of higher quality and that are inclusive and better poised to help the world.

To create these more accountable products, Microsoft's Principles for AI create top-level expectations. This toolkit helps set the path to implementation and the development of the products themselves. It also helps empower engineers to get into the details of responsible product development through various ML tools, workshops, and prompt conversations.

The impacts of these efforts are already visible in the features of some Microsoft products, such as spatial analysis , speech consent , and Custom Neural Voice, which emphasise privacy, meaningful consent, and transparency, respectively. Without these value commitments embedded into concrete design processes – crossing the intention-action gap – these products might have been designed in a less responsible way.

These products are ultimately rooted in practical ethical thinking and action. In our research, when we compared Microsoft's implementation of responsible AI to the Best Ethical Practices in Technology published in 2018 by the Markkula Center for Applied Ethics, we discovered that Microsoft has implemented or has begun to implement most of these practices. For example, Microsoft's AI Principles directly connect to six of the collected best practices.

Looking ahead

These lessons show how one company operationalized responsible innovation. These principles, governance model, and tools can be adapted and applied to other technologies and organizations.

To be sure, change won’t happen overnight. A sea change is needed in corporate culture towards responsible innovation and ethical action. But we need this sea change not only in corporate culture, but in all of culture and society, as we learn how to use technologies for their best purposes. Recognizing that these problems exist is the first step to exploring how they can be solved.

"A sea change is needed in corporate culture towards responsible innovation and ethical action."

As more sectors of our society digitally transform, more organizations will need to go through their journey to operationalize technology ethics. If corporations do not make these efforts to improve their cultures, processes, and products then we will not only fail to achieve the promise of technology to make a brighter future for all, but experience effects from technology that damage society and harm individuals.

The above efforts helped Microsoft to actualize their ideas and close the intention-action gap. They are now sharing these lessons in the hopes that others might find them useful and also share their own lessons from their own experiences. If more companies are willing to share their own experiences it will not only allow for mutual benefit, but also help to raise expectations of ethical thinking across more sectors, and hopefully lead to greater benefits across the globe.

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License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

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Microsoft Stakeholders & Corporate Social Responsibility Strategy

Microsoft corporate social responsibility, stakeholder analysis, CSR, corporate citizenship, green computer business ethics, sustainability case study

Microsoft Corporation’s corporate social responsibility (CSR) strategy is founded on a number of international concerns regarding the information technology, software, and online service business. Archie Carroll developed the corporate social responsibility model to highlight the mutual influence among stakeholders and businesses. In Microsoft’s case, stakeholders include persons and groups with significant interest in how the company performs and interest in the impact of its computing products. As a major player in the global market, the firm must maintain an evolving corporate responsibility strategy to ensure that corresponding programs satisfy stakeholders’ interests and enhance corporate and brand image, which is a strength identified in the SWOT analysis of Microsoft . Corporate citizenship and corporate social responsibility programs strengthen the IT company’s competitiveness.

Using a continuously improving corporate social responsibility (CSR) strategy, Microsoft Corporation addresses stakeholders’ interests that significantly impact the business. The company satisfies such interests through appropriate corporate citizenship programs based on international standards and guidelines. Microsoft’s mission statement and vision statement determine the design of these CSR programs for sustainability, green technology, and business ethics.

Microsoft’s Stakeholder Groups & CSR Initiatives

A variety of stakeholders and their interests impose a wide scope of issues on Microsoft Corporation. However, the company focuses on the most significant interests through its corporate social responsibility initiatives, which emphasize human rights, environmental sustainability, and business transparency. The following are the major stakeholder groups significant in Microsoft’s business, arranged according to the company’s prioritization in its CSR strategy:

Customers (highest priority)
Communities
Governments

Customers (Top-Priority Stakeholders) . Considering Microsoft’s business growth needs, customers are the top-priority stakeholder group in the company’s corporate social responsibility strategy. These stakeholders are mainly interested in reasonably priced effective products, along with high quality customer service. These interests significantly influence the company in terms of customer retention and related sales revenues. Microsoft’s corporate responsibility approach satisfies these interests through innovation to provide advanced computer hardware and software products to customers. In addition, feedback systems enable the company to address customers’ complaints and issues encountered in using the products. To further satisfy the interests of this stakeholder group, Microsoft offers discounts to some customers. For example, students and veterans can purchase the company’s computing products at discounted prices. These discounts are also implemented as a part of Microsoft’s marketing mix (4P) . Thus, Microsoft’s corporate social responsibility strategy effectively satisfies the concerns and interests of customers as the most significant stakeholder group.

Employees . Human rights are among the main thrusts in Microsoft’s corporate social responsibility programs. As such, employees are the second-priority stakeholder group in the company’s CSR approach. The interests of employees are competitive compensation, as well as fair labor and employment practices. These stakeholders are significant because of their direct effect on Microsoft Corporation’s organizational performance through human resource competence and productivity. To satisfy employees’ interests, the company’s corporate responsibility strategy involves highly competitive compensation along with continuous improvement in employment practices to protect workers’ rights. For example, Microsoft offers high salaries for qualified workers, in order to compete with technology firms, like Apple , Google (Alphabet) , and Amazon . Also, Microsoft maintains training and leadership development programs to address workers’ interests in the computer technology business. These CSR programs support human resource improvement while increasing morale and competence among employees. Based on these initiatives, Microsoft’s corporate social responsibility strategy satisfies the interests of employees as a major stakeholder group.

Communities . Communities are among the major stakeholder groups in Microsoft’s corporate responsibility strategy, considering that the company includes environmental sustainability as one of its CSR thrusts. Communities are interested in corporate support for development, such as through livelihood programs and environmental protection. These stakeholders are significant because they affect Microsoft’s corporate and brand image. For example, customers use community impact as a criterion in evaluating brands. In its corporate social responsibility strategy, Microsoft uses a number of programs, including discounts for students, military personnel and veterans, as well as donations and assistance through Microsoft grants and charity programs. Such discounts increase the accessibility of the company’s products for students, military personnel and veterans. On the other hand, Microsoft Philanthropies provides grants and donations for deserving nonprofit organizations with programs that support community development, such as education and youth support programs. Moreover, the emphasis on environmental sustainability in its corporate social responsibility strategy represents Microsoft’s commitment to minimize the environmental impact of its business. For example, the company maintains its carbon neutral status through the use of smart packaging and renewable energy, as well as renewable materials for its computer technology products. Thus, Microsoft’s corporate social responsibility strategy satisfies this stakeholder group’s interests and fulfills the company’s aims as a corporate citizen.

Investors . Microsoft identifies transparency as one of its main thrusts in its corporate social responsibility strategy. In this regard, investors are among the main stakeholder groups in the computer hardware and software business. Investors affect Microsoft through the availability of capital. The interests of these stakeholders are business growth and accurate financial reporting. Microsoft’s corporate responsibility efforts satisfy these interests through a variety of disclosures about the business, which benefit investors. For example, these CSR initiatives enable investors to make better decisions about the company. The firm’s business stability also addresses investors’ interest regarding business growth. These initiatives show that Microsoft’s corporate social responsibility strategy satisfies the interests of investors as a significant stakeholder group.

Governments . Microsoft’s corporate social responsibility approach considers governments as stakeholders in the business. This stakeholder group is significant because they directly influence the company’s limits in doing business. Governments are interested in Microsoft’s legal and regulatory compliance, as well as contributions to economic growth. The company satisfies these interests through stringent measures in the organization. For example, Microsoft’s corporate guidelines require human resource managers to comply with labor regulations. These guidelines also require compliance with regulations on environmental impact, product safety, and consumer security. These corporate social responsibility efforts indicate that Microsoft satisfies the interests of governments as stakeholders in the business.

Microsoft’s Corporate Social Responsibility Performance in Addressing Stakeholders’ Interests

As a global computer technology business, Microsoft Corporation has taken the necessary steps for a corporate social responsibility strategy that satisfies the interests of its major stakeholders. The company has high performance in addressing its stakeholders. Microsoft’s emphasis on human rights, environmental sustainability and transparency ensure that this corporate responsibility strategy remains relevant to current market conditions. However, an issue typical in large global organizations like Microsoft is the lack of immediate responses to individual customer complaints and inquiries. In this regard, a recommendation is that the company must invest in a larger support community to harness knowledge sharing that can enhance the corporate social responsibility strategy.

Homer, S. T., Yee, K. V., & Khor, K. S. (2023). Developing a measurement instrument for perceived corporate citizenship using multi-stakeholder, multi-industry and cross-country validations. Quality & Quantity, 57 (1), 277-300.
Microsoft Corporation – Form 10-K .
Microsoft Corporation – Our Sustainability Journey .
Microsoft Education Store – Student Discount & Deals .
Microsoft Military Discount .
Paruzel, A., Schmidt, L., & Maier, G. W. (2023). Corporate social responsibility and employee innovative behaviors: A meta-analysis. Journal of Cleaner Production , 136189.
U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry .
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Microsoft Corporate Social Responsibility Analysis

What exactly is corporate social responsibility? Why Microsoft has been ranking consistently at the top for CSR? We shall take a look at these questions to understand how Microsoft Corporate social responsibility is a great case in CSR.

The need for Corporate social responsibility

The world has improved a lot since the 19th century, primarily due to the industrial revolution. However, this growth came at the cost of the rapidly depleting environment. The second change that happened was that companies realized over a period of time that it was not just the shareholders who were important. Companies are increasingly becoming more responsible towards external stakeholders. Industries realized that their sole purpose was not to make money.

Here comes the CSR part. The corporate social responsibility of a firm is all about integrating external stakeholders like the environment and society into the business decision-making process. Therefore, the goal of corporate social responsibility is to reduce the negative impact of any company’s actions along with these directions. The ultimate goal of CSR is to create positive action for society as well as the environment. It should be noted that these benefits are not coming at the cost of the profit of the organization.

Initially, there were only manufacturing-related companies that took part in CSR activities. However, over a period of time, even software companies like Microsoft got into it. Let us find out why.

An overview of Microsoft’s approach towards CSR

Microsoft is one of the top companies in the world. Microsoft has taken a proactive approach to corporate social responsibility. One of the ways of knowing whether the firms are serious about CSR is through their annual reports. Annual reports are documents that are primarily targeted towards investors. A company may talk about its responsibilities towards society and its environment. This shows their attitude towards these issues. Microsoft releases its corporate sustainability report based on the Global Reporting Initiative guidelines.

Microsoft has defined some of the broader CSR goals as:

Empowering people
Strengthening the communities
Protecting our planet

In order to fulfill these broader goals, they have formulated a CSR team. This team is called the Microsoft Technology and Corporate Responsibility or the TCR team. Apart from the TSR team within Microsoft, they are also active through the Bill and Melinda Gates Foundation. Microsoft founder Bill Gates has donated a major part of his wealth for philanthropic purposes. This foundation looks at operationalizing some of these philanthropic goals.

“We are grounded in creating local economic opportunity in every community, helping to unlock the power of technology to address our customers’ most pressing challenges.” – Satya Nadella

Microsoft CSR case study

Now we shall look at some of the live examples of how they have executed the CSR . They have been working broadly on the aspects of empowering people. Additionally, they have also looked at ways in which Microsoft as a technology enabler, can help communities across the world. Thirdly, Microsoft is also committed to reduce the carbon footprints of its product in order to protect the environment.

It should be noted here that some of the actions are driven by philanthropic motives while some may be simply following an overall industrial trend. However, the attitude and effectiveness in these aspects are a testament to a company’s CSR activities.

Microsoft launched a solar project in Nigeria to help the local community. Through this project, they have established a center with solar panels to charge the batteries. They have also used Microsoft Azure, their cloud technology to optimize the inverters. This has resulted in a self-sustaining and environmentally friendly solution for the people.

Empowering people

Microsoft is using cloud technology to empower office workers. They have reported that their use of Microsoft software helps the team in building a more powerful workplace. Firstly, they have changed the format of the delivery of the Microsoft Office. Microsoft Office now also comes as a cloud subscription under the name of Office 365. Using this technology, they’re trying to make the workplace more sophisticated. They also attempt to make the applications more secure for the end-users.

Secondly, some of their software offerings are also free of cost. It is interesting to note that their best-selling office applications can be used for free. Office 365 comes with Microsoft Word, Powerpoint, and Excel. This free package could be quite helpful for people working in smaller teams who cannot afford expensive software. Microsoft also attempts to provide higher accessibility in its software. These features are quite helpful for people who are differentially abled.

Strengthening the communities

They have attempted to strengthen the community through the Microsoft Corporate social responsibility team. One of the ways in which they are trying to strengthen the community is through inclusive hiring. In closing, hiring is a process in which a company attempts to have equal opportunity for everyone. It can also mean affirmative actions to provide better opportunities for underprivileged classes.

Secondly, they also attempt to provide some of the toolkits for development. These toolkits could be helpful for startups. They are also used by non-government organizations.

Thirdly, Microsoft has organized skill development and educational courses. Some of the students find these courses particularly useful. Microsoft also collaborated with the Markle Foundation to train around 50,000 workers.

Protecting our planet

It is easier to visualize automotive as environmental pollutants. However. IT products and services can also have an environmental impact . Microsoft has said that it is working on three broader environmental areas.

Firstly, they’re trying to reduce the impact through lower carbon footprint and energy usage. Microsoft was one of the first companies to achieve 100% carbon neutrality in 2012. Furthermore, a lower carbon footprint means that using more eco-friendly materials in their products. A life cycle assessment of the materials helps in lowering carbon footprint.

Secondly, they attempt. To preserve the water and natural ecosystems. Microsoft has laid down certain rules to increase water efficiency. There is also scope to help the affected counties in overcoming the shortage of potable water. Microsoft is also working towards net-zero water certification for its establishment.

Thirdly, Microsoft attempts to reduce the impact of its operations on the environment. Microsoft has taken steps to increase the usage of renewable energy. They have achieved this through. Using solar energy for some of their energy needs. Additionally, they have also looked at ways to minimize waste. In their products, they have achieved this through smaller and lighter packaging. Microsoft has also partnered with other enterprises too. They have created an extensive recycling program for their products.

The way forward for Microsoft’s corporate social responsibility

Microsoft’s corporate social responsibility team has already laid out some of the goals for the future. Some of these goals are:

Using AI for ecological conservation. They use AI to analyze geo-spatial data faster and more precisely. This can help build models to conserve and environmentally sensitive areas.
One of the contributors to the environmental impact of a product is transportation. We can reduce this impact primarily by reducing the weight of the products. Microsoft plans to reduce the weight of its product by 20%. They have projected that this would reduce greenhouse emissions by around 29%.
A simple optimization of the CPU can lead to lower energy consumption. Microsoft plans to use this approach to help people get better battery life as well as reduce the energy consumption of their products.
Microsoft also plans to poise and mobilize people for natural disasters and humanitarian work. They said that they are collaborating with other organizations to help achieve these goals.

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Microsoft’s 2023 Diversity and Inclusion Report: A decade of transparency, commitment and progress

Nov 1, 2023 | Lindsay-Rae McIntyre - Chief Diversity Officer and Corporate Vice President of Talent Development

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Global diversity and inclusion report artwork

Today, I am sharing Microsoft’s  2023 Global Diversity & Inclusion Report — our fifth consecutive annual report and the 10th year of releasing our global workforce demographic data. As we mark this milestone, a couple of key aspects about our company’s work on diversity and inclusion (D&I) stand out: Our journey is ever evolving, and our focus and progress are consistent, both of which are vital to delivering on Microsoft’s mission to empower every person and every organization on the planet to achieve more.

This year’s report shows that we continue to be a more diverse Microsoft today than we have ever been. Looking at this year’s data as well as our cumulative efforts, it’s clear that we are driving positive change. The data we share is also a powerful tool for us to understand with precision where we need to concentrate and accelerate our work. This year, amid an evolving macroeconomic environment, our company — like many others — made intentional organizational and workforce adjustments to meet the strategic demands of the business, which impacted our rate of progress in some areas. While there’s more work to be done, I am motivated by our ongoing progress and sustained efforts on increasing representation and strengthening a culture of inclusion, as detailed in this year’s report.

Key highlights

The representation of women and most racial and ethnic minority groups (Asian, Black and African American, Hispanic and Latinx, and multiracial employees) has increased at all levels over the past five years.
The representation of women in Executive roles is 29.1%, a 3.2 percentage point increase year over year. This was the highest year-over-year Executive representation growth across women, men, and U.S. racial and ethnic groups in 2023.
The number of Black and African American Directors, Partners and Executives (including People Managers and Individual Contributors) rose to 107.8% of our 2025 Racial Equity Initiative commitment, up from 92.0% in 2022.
The number of Hispanic and Latinx Directors, Partners and Executives (including People Managers and Individual Contributors) increased to 74.8% of our 2025 Racial Equity Initiative commitment, up from 57.6% in 2022.
While hiring volume slowed, hiring representation was greater than or equal to representation for women and all racial and ethnic minority groups except Native American and Alaska Native.
Inside the U.S., all racial and ethnic minority groups who are rewards-eligible combined earn $1.007 total pay for every $1.000 earned by U.S. rewards-eligible white employees with the same job title and level and considering tenure.
Inside the U.S., women who are rewards-eligible earn $1.007 total pay for every $1.000 earned by rewards-eligible employees who are men and have the same job title and level, and considering tenure; outside the U.S., women who are rewards-eligible earn $1.003 total pay for every $1.000 earned by rewards-eligible employees who are men and have the same job title and level, and considering tenure.
As of September 2023, our analysis shows that we have made progress in narrowing the median unadjusted pay gap for women in the U.S., women outside of the U.S., and Asian, Black and African American, and Hispanic and Latinx employees in the U.S.
As we continue to increase representation for women and racial and ethnic minority groups at more senior levels, and continue to ensure pay equity for all, the gap between the medians will continue to reduce.

Hires data: As one of the most transparent companies of our size when it comes to the diversity and inclusion data we share, we are continually evaluating where we are now and where we aim to be. That is why, in addition to the extensive data we already share, we’re reporting on external hires representation for women and men globally and race and ethnicity in the U.S. for the first time. This data reflects the hires of members of a particular group as a percentage of total employee hires within the respective fiscal year. Hires representation being higher than headcount representation is one of the factors that could increase a group’s representation in the workforce. This past fiscal year, hires representation was greater than headcount representation for women as well as Asian, Black and African American, Hispanic and Latinx, and multiracial employees.

Self-ID data: At Microsoft, Self-ID helps us recognize the different identities, experiences and needs of the entire workforce. Through voluntary Self-ID, employees can help Microsoft make better-informed, more inclusive decisions about meaningful benefits and programs that meet their needs in various stages of life, flex to their interests, and enrich their lives. Self-ID is available globally in 46 markets with some variation, as dictated by local laws, practices and customs. We continue to evolve self-identification options for employees to be as inclusive as possible.

This year, we’re sharing more self-identification (Self-ID) data on Asian sub-identities in the U.S. to further highlight the importance of identity and the impact of self-identification. This comes after expanding the options for Asian employees in the U.S. who want to identify their backgrounds in additional detail last year. The Asian community is the single largest racial and ethnic minority group within our company, with more than 20 sub-identities.

Employee survey data

In addition to our demographic data, we share employee survey data in our D&I report each year, which helps us assess the impact of our D&I efforts so we can better understand how to close the gap between the culture of inclusion we aspire to and the lived experiences of everyone at Microsoft. We have continued to invest in experiences, behavior and organization changes, as well as prioritization of retention and development. This year, meaningful insights include:

This year, 96.4% of employees reported some level of awareness of the concept of allyship, which is a cornerstone of our growth mindset approach to D&I. This is up from 90.3% in 2022 and 65.0% in 2019, when we first started asking employees about their awareness.
The average score for the survey question asking employees if they understand what is expected of them to contribute to a more diverse and inclusive environment increased from 82 to 84 globally year over year, and from 80 to 83 in the U.S. Additionally, the average score increased year over year for men, women and every racial and ethnic group.

Inclusion spotlights

While data is important, it does not tell the whole story. Through six Inclusion Spotlights, this year’s report shares more details on some of the people, programs and initiatives that demonstrate how we invest in and innovate for D&I.

Global strategy, local implementation: We explore how the global Microsoft workforce activated around D&I this past year in ways relevant and meaningful to local employees and communities to drive positive change.
Inclusion from the start: We shine a spotlight on New Employee Orientation (NEO) as well as the Nuance acquisition and explore ways we introduce a culture of inclusion to new employees or integrate companies we acquire into our inclusive culture.
Self-expression in our products: We connect how technical and D&I expertise come together to inform new self-expression tools, including profile videos, pronouns and name pronunciation.
Innovative learning: We delve into some of our learning offerings, informed by a range of communities and experts, that enable employees to deepen their understanding and take intentional action for meaningful progress.
D&I Core Priority: We share the evolution and impact of the D&I Core Priority, an accountability approach that sets Microsoft apart.
AI & D&I: We look at how we build trust through our responsible AI strategy and inclusive AI solutions.

As we look ahead, we are unwavering in our focus to attract, develop and retain a workforce that reflects a diversity of backgrounds, skills and experiences. We support employees’ careers through intentional talent management, access and career mobility across all levels of our organization. To further support this, our team and my role have recently evolved to include talent development efforts in addition to global D&I work. This organizational alignment allows us to further embed D&I into all our talent practices in an effort to accelerate representation progress.

We believe our continued work to build diverse workforces and strengthen our culture of inclusion helps foster innovation and serve our business and customer needs. I am confident that our combined momentum and commitment will only fuel additional ways for us to leverage our resources with intention, driving progress toward a more diverse and inclusive Microsoft.

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Case Study Microsoft Ethics

Microsoft has a blending reputation and presentation with the public and Its users. They Investment In the communities, the youth and globally. Not only the company invests but the employees contribute.

As Always Bill Gates take it to the top with the William and Melinda Gates Foundation. Microsoft’s efforts and dedication is admirable. Its support of start-up software companies, creates a unique composition of company characteristics, that somewhat contradict their actions within the nominative business world.

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Antitrust issues should be Microsoft’s middle names. From the early ass’s till now Microsoft has been involved in number antitrust issues, anti-competitive activities, and monopolist tactics.

During all of the investigations Microsoft is not very willing to provide information. They are very combative and they have a swindling tactic. Despite all of Microsoft’s misconduct In the business world they are still thriving, expanding and Innovating.

Questions: 1

The unique aspects of the software Industry that allowed Microsoft to actively come a monopoly and be Involved In anticompetitive practices are the ablest to bundle, the size and abilities of the competing companies along with Microsoft inability to share. The very first investigations was Microsoft selling to Memos and at 60% discount as long as they paid Microsoft per processor not per copy.

So every computer that the Memos sold they paid Microsoft instead of every computer that had Microsoft installed on it.

This concept was double charging the consumer even if they opted for a different operating system, they were still paying Microsoft. Also any MOM could accept the offer of 60%, this cost being unbeatable economically, and squashes out the competition because who would pay full price? In October of 1997 Microsoft was faced again with a violations of previous court decisions Involving the bundling of Microsoft and Internet Explorer web browser.

Windows bundled Windows 95 with Internet explored stating that It was “Integral, inseparable part of Windows 95” they said this was not done to disadvantage anyone.

The district Court issued an injunction the no longer allowed Windows to undue. Windows complied and sold Windows 95 without internet explorer which resulted in software failure, which Microsoft knew would happen, this resulted in Microsoft being held in contempt and their stock price falling. Microsoft had to publish and up to date version that allow Windows 95 to work without Internet Explorer. These two cases were the start of a repetitive future for Microsoft that has led to the request to split Microsoft into two companies due to their consistent bullying and predatory pricing of companies such as Netscape and Apple .

Questions: 2

Microsoft’s leadership and corporate culture are solely responsible for their ethical and legal Issues. Every decision and direction the company acts on Is fathered by the corporate leadership. Many of the cases explained In the case Involve the CEO or legal team negotiating a lea, not snarling International, proposing Illegally splitting the market. Their choices lead the company. Even Jim Allelic “Microsoft’s Lord of Windows” couldn’t completely defend Microsoft’s product in the 1998-1999 trial.

Their choices in every investigation and trail where never positive for the company.

Questions: 3

After reading this case their philanthropic activities seem to overshadow the wrong doing in the business community. Much of the litigation happened before I was old enough to even care about the news or what a computer company was doing. Vie never heard anything negative about Microsoft. After reading what they have done that’s been published in the text. It appears the philanthropic actions are a cover up.

If they do enough good the bad and ugly will fade away, which that theory seems to be working. Microsoft has overcome a lot of their legal mishaps and their reputation at least to my generation is very good.

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Satya Nadella employed a 'growth mindset' to overhaul Microsoft's cutthroat culture and turn it into a trillion-dollar company — here's how he did it

Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.
Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
Visit Business Insider's homepage for more stories .

A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

That particular cartoon – drawn in 2011 by a Google employee named Manu Cornet , no less – made changing Microsoft's culture Nadella's No. 1 goal as CEO.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset . The concept has helped Microsoft made the shift to remote work with aplomb, reaching a market cap of more than $1.6 trillion, showing that Nadella's strategy has survived the pandemic intact.

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset — and how they predict success — was pioneered by Stanford's Carol Dweck.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella.

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Since the era of Bill Gates, Microsoft's founder and first CEO, its leadership had generally rewarded the smartest person in the room. And Microsoft performed well under Gates, but that performance came at a cost.

Gates was famous for meltdowns and browbeating – so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition — it only respects innovation," Nadella wrote on Feb. 4, 2014, in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

"We had a little bit of a 'not-invented-here' syndrome," Microsoft Chief People Officer Kathleen Hogan previously told Business Insider , referring to the tendency for developers and even organizations to reject acceptable solutions to problems if they hadn't developed those solutions themselves.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

Nadella pushes Microsoft executives to take on stretch assignments

Nadella asked Peter Lee , one of the company's top researchers, to make a big change.

It was 2017 and Lee – now corporate vice president of Microsoft healthcare – had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division.

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said.

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset – the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth – Lee was recently named to the National Academy of Medicine – and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech.

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company – at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce – which competes directly with Microsoft's customer-relationship-management Dynamics 365 product – in order to ink a big cloud deal that was good for the company overall.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices — often significantly — when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. The Pentagon in September upheld its decision to award the contract to Microsoft but AWS is expected to file a new complaint as part of the lawsuit next week.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring — and retaining — a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Microsoft has since announced plans to double the number of Black leaders and employees within the company, and the number of Black suppliers with which it works.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030.

Some Microsoft employees say the company is making progress. Rich Neal, a senior director who's been with the company since 2003, recalled a recent meeting in which a male colleague all but repeated the same comment a female colleague had shared 15 minutes earlier.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Microsoft released the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Watch: Microsoft News' corporate vice president explains how his team avoids fake news sorting through 170,000 stories a day

Main content

The ghosts of ‘Wintel’: What leaders can learn from the diverging paths that made Microsoft a $3 trillion powerhouse and flatlined Intel

Bill Gates and Andy Grove saw their companies follow very different trajectories after they each stepped down.

Steve Jobs wasn’t accustomed to hearing “no.” But that was the answer from Paul Otellini, CEO of Intel .

It was 2006, and Intel, the global king of computer chips, was bringing in record revenue and profits by dominating the kinds of chips in hottest demand—for personal computers and data centers. Now Jobs wanted Intel to make a different type of chip for a product that didn’t even exist, which would be called the iPhone.

Otellini knew chips for phones and tablets were the next big thing, but Intel had to devote substantial capital and its best minds to the fabulously profitable business it already possessed. Besides, “no one knew what the iPhone would do,” he told The Atlantic seven years later, just before he stepped down as CEO. “There was a chip that they were interested in, that they wanted to pay a certain price for and not a nickel more, and that price was below our forecasted cost. I couldn’t see it.”

Otellini, who died in 2017, was a highly successful CEO by many measures. But if that decision had gone the other way, Intel might have become a chip titan of the post-PC era. Instead, it gave up on phone chips in 2016 after losing billions trying to become a significant player. As he left the company, Otellini seemed to grasp the magnitude of his decision: “The world would have been a lot different if we’d done it.”

Meantime, some 800 miles north, in Seattle, Microsoft was struggling to find its role in a tech world dominated by the internet, mobile devices, social media, and search. Investors were not impressed by its efforts. No one could have foreseen that years later, a few key decisions would set the company up as an AI powerhouse and send its stock soaring. There was a time not so long ago that Microsoft and Intel were both atop the tech world. They were neither competitors nor significant customers of each other, but what New York University’s Adam Brandenburger and Yale’s Barry Nalebuff deemed “complementors.” Microsoft built its hugely profitable Windows operating system over the years to work on computers that used Intel’s chips, and Intel designed new chips to run Windows (hence “Wintel”). The system fueled the leading tech product of the 1990s, the personal computer. Microsoft’s Bill Gates became a celebrity wonk billionaire, and Intel CEO Andy Grove was Time ’s 1997 Man of the Year.

Since then their paths have diverged sharply. Microsoft in 2000 was the world’s most valuable company, and after losing that distinction for many years, it’s No. 1 again. Intel was the world’s sixth most valuable company in 2000 and the largest maker of semiconductors; today it’s No. 69 by value and No. 2 in semiconductors by revenue, far behind No. 1 TSMC (and in some years also behind Samsung ).

Chart shows Microsoft and Intel stock prices since 1990

A Fortune 500 CEO makes thousands of decisions in a career, a few of which will turn out to be momentous. What’s easy to explain in hindsight—that Microsoft would be at the forefront of AI, that Google would become a behemoth, that Blockbuster would fade into obscurity—is never preordained. Often the fateful decisions are identifiable only in retrospect. Nothing more vividly illustrates this than the parallel stories of Microsoft and Intel. The case study of what went right and wrong at those two giant corporations offers a master class in business strategy not just for today’s front-runners at the likes of Google, Open AI, Amazon , and elsewhere—but also for any Fortune 500 leader hoping to survive and thrive in the coming decade.

Wintel’s origin story

The two companies were founded a mere seven years apart. Intel’s founders in 1968 included Robert Noyce, coinventor of the computer chip, and Gordon Moore, who had written the seminal article observing that the number of transistors on a chip doubled every year, which he later revised to two years—Moore’s law, as others later called it. Andy Grove was employee No. 3. All three are still regarded as giants of the industry.

Bill Gates famously dropped out of Harvard to cofound Microsoft with Paul Allen, a childhood friend. They were excited by the prospects of creating software for a new concept, the personal computer, also called a microcomputer. They launched Microsoft in 1975.

The two companies’ paths crossed when IBM decided in 1980 to produce a PC and wanted to move fast by using existing chips and an existing operating system developed by others. It chose Intel’s chips and Microsoft’s operating system, profoundly transforming both companies and the people who ran them. IBM’s size and prestige made its design the industry standard, so that virtually all PCs, regardless of manufacturer, used the same Intel chips and Microsoft operating system for decades thereafter. As PCs swept America and the world, Intel and Microsoft became symbols of technology triumphant, glamour, success, and the historic bull market of 1982 to 2000.

Then everything changed.

The reign of Gates and Grove peters out

In October, 2000, Fortune ran an article with an illustration depicting Gates and Grove as monumental Egyptian sphinxes. The headline: “Their Reign Is Over.”

The reasoning: “Gates and Grove attained hegemony by exploiting a couple of key choke points in computer architecture—the operating system and the PC microprocessor,” the article explained. “But in the new, more diverse IT world wired together by universal internet protocols, there are no such obvious choke points to commandeer.”

Thus began a multiyear identity crisis for both companies. Intel’s PC chips and Microsoft’s PC operating system and applications remained bountifully profitable businesses, but both companies and their investors knew those were not the future. So what was? And who would lead this new era?

In January of 2000, Gates stepped down as CEO after 25 years, and Steve Ballmer, Microsoft’s president and a college friend of Gates, took his place; Gates remained chairman. Two days later, Microsoft’s stock rocket ran out of fuel. On that day the company’s market value hit $619 billion, a level it would not reach again for almost 18 years.

Grove was no longer Intel’s CEO in 2000, having handed the job to Craig Barrett, a longtime company executive, in 1998. But as Intel’s visionary and most successful CEO, Grove remained an important presence as chairman of the board. His health was becoming an issue; he had been diagnosed with prostate cancer in 1995, and in 2000 he was diagnosed with Parkinson’s disease. Intel’s stock roared until August, when the company’s market value peaked at $500 billion. It has never reached that level since.

But most significantly, 2000 was the year that the internet began to seem like it just might make Wintel irrelevant.

At Intel, Barrett responded with acquisitions, many of which were in telecommunications and wireless technology. In concept, that made great sense. Cell phones were going mainstream, and they required new kinds of chips. “Craig tried to very aggressively diversify Intel by acquiring his way into new businesses,” says David Yoffie, a Harvard Business School professor who was on Intel’s board of directors at the time. “I would say that was not his skill set, and 100% of those acquisitions failed. We spent $12 billion, and the return was zero or negative.”

In the lean years after the dotcom balloon popped, Barrett continued to invest billions in new chip factories, known as fabs, and in new production technologies, so Intel would be well positioned when demand rebounded. That is a hint to one of the most important lessons of the Wintel saga and beyond: Protecting the incumbent business, even in a time of transition, is almost impossible to resist. That course usually sounds reasonable, but it holds the danger of starving the company’s future. As the great management writer Peter Drucker said: “If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.”

‘We screwed it up’

At Microsoft in the 2000s, “it was not at all obvious what would happen with the shape and volume of PCs, with operating system margins, or the future of applications like Word or Excel,” says Ray Ozzie, a top-level Microsoft executive from 2005 to 2010. “There was significant internal debate at Microsoft and in the industry on whether, in the future, the PC was dead, or if it would continue to grow and thrive.” Maybe Word, Excel, and those other applications that resided on your hard drive would move to the internet, like Google Docs, introduced in early 2006. In that case Microsoft would need a new business model. Should it develop one? Some executives thought so. But no one knew for sure.

During this period, Microsoft was hardly a model of corporate innovation, and succumbed to what often happens when successful companies are disrupted. Ozzie explains: “When you are rolling in resources and there are multiple existential threats, the most natural action to protect the business is to create parallel efforts. It’s more difficult to make a hard opinionated choice and go all in. Unfortunately, by creating parallel efforts, you create silos and internal conflict, which can be dysfunctional.”

As competing teams fought for primacy, Microsoft missed the two most supremely profitable businesses since the PC era: search and cell phones. Those misses were not fatal because Microsoft still had two reliable, highly profitable businesses: the Windows operating system and the Office suite of apps. But in Drucker’s terms, those were yesterday businesses. Investors didn’t see substantial tomorrow businesses, which is why the stock price went essentially nowhere for years. Missing search and cell phones didn’t threaten Microsoft’s existence, but it threatened Microsoft’s relevance and importance in a changing world, which could eventually damage the company’s appeal among investors and the world’s best employees. The reasons for those crucial misses are instructive.

In 2000 Google was an insignificant internet search startup with no clear business model, but it had an inkling that selling advertising could be profitable. We know how that turned out: Google’s 2023 ad revenue was $238 billion. The model was entirely foreign to Microsoft, which made tons of money by creating software and selling it at high prices. Charging users nothing? Selling ads? Microsoft had never run a business at all like Google’s. By the time Google’s model had proved itself, Microsoft was hopelessly far behind. Today its Bing search engine has a 3% market share across all platforms worldwide, says the StatCounter web-traffic analysis firm. Google’s share is 92%.

Microsoft’s failure in cell phones was, in a large sense, similar—the company didn’t fully grasp the structure of the business until it was too late. The company assumed the cell phone industry would develop much like the PC industry, in which sellers like Dell combined Intel’s chips and Microsoft’s software in a final product. But Apple’s starkly different iPhone business model, in which it designs its own chips and writes its own software, was an enormous hit. The other big winner in the industry, Google’s Android smartphone operating system, likewise ignored the PC model. Instead of selling its operating system, Google gives it away to phone makers like Samsung and Motorola. Google makes money by putting its search engine on every phone and by charging app makers a fee when users buy apps.

Bill Gates acknowledges that Microsoft’s miss in cell phones was life-changing for the company. Looking back on his career in 2020, he said: “It’s the biggest mistake I made in terms of something that was clearly within our skill set.”

Intel also lost the mammoth cell phone opportunity, and in a similar way. It couldn’t adapt. Intel understood the opportunity and was supplying chips for the highly popular BlackBerry phone in the early 2000s. The trouble was, Intel hadn’t designed the chips. They were designed by Arm, a British firm that designs chips but doesn’t manufacture them. Arm had developed a chip architecture that used less power than other chips, a critical feature in a cell phone. Intel was manufacturing the chips and paying a royalty to Arm.

Understandably, Intel preferred to make phone chips with its own architecture, known as x86. Paul Otellini decided to stop making Arm chips and to create an x86 chip for cell phones—in retrospect, “a major strategic error,” says Yoffie. “The plan was that we would have a competitive product within a year, and we ended up not having a competitive product within a decade,” he recalls. “It wasn’t that we missed it. It was that we screwed it up.”

Groping for a megatrend

Just as 2000 was a turning point for Intel and Microsoft, so was 2013. Broadly they were in the same fix: still raking in money from the businesses that made them great; getting into the next big opportunities too late or unsuccessfully; groping for a megatrend they could dominate. Their stock prices had more or less flatlined for at least a decade. Then, in May 2013, Paul Otellini stepped down as Intel’s CEO. In August, Steve Ballmer announced he would step down as Microsoft’s CEO.

Succession is the board of directors’ No. 1 job, more important than all its other jobs combined. The stakes are always high. How the Intel and Microsoft boards handled their successions, nine months apart, largely explains why the two companies’ storylines have diverged so dramatically.

Under Otellini’s successor, Brian Krzanich, Intel kept missing new-chip deadlines—ironically failing to keep up with Moore’s law even as competitors did so—and lost market share. The company gave up on smartphone chips. After five years as CEO, Krzanich resigned abruptly when an investigation found he had had a consensual relationship with an employee. CFO Bob Swan stepped in as CEO, and the production troubles continued until, by 2021, for the first time in Intel’s existence, its chips were two generations behind competitors’. Those competitors were Taiwan’s TSMC and South Korea’s Samsung.

In crisis mode, Intel’s board brought back Pat Gelsinger, an engineer who had spent 30 years at Intel before leaving for 11 years to be a high-level executive at EMC and then CEO of VMware . As Intel’s CEO he has announced an extraordinarily ambitious and expensive plan to reclaim the company’s stature as the world leader in chip technology.

Microsoft’s board spent almost six months finding Ballmer’s successor under worldwide scrutiny. At least 17 candidates were publicly speculated upon. British and Las Vegas bookies offered odds on the eventual winner; Satya Nadella, who recently marked 10 years as CEO, was a 14-to-1 long shot.

Nadella has arguably been the best corporate succession choice, regardless of industry, in years or perhaps decades. Under his leadership the stock finally broke out of its 14-year trading range and shot upward, rising over 1,000%. Microsoft again became the world’s most valuable company, recently worth $3.1 trillion. Gelsinger, with just over three years in the job, can’t be fully evaluated; industry experts wonder if he’ll be Intel’s Nadella. But both CEOs offer useful examples of how to move a company from the past to the future.

Nadella orchestrated Microsoft’s dramatic turnaround by taking an outsider’s look at the company and making big changes with little drama. He began by making Office apps (Word, Excel) compatible with Apple iPhones and iPads—heresy at Microsoft, which regarded Apple as an archenemy. But Nadella realized the two companies competed very little, and why not let millions more people rely on Office apps? The move sent a message to the company and the world: The Microsoft culture’s endemic arrogance would be dialed down considerably. Interoperating with other companies could now be okay.

That was largely a new business model at the company, with many more to follow. For example, Nadella bought LinkedIn , a player in social media, which Microsoft had entirely missed, and later bought GitHub, a repository of open-source code, which Microsoft had previously despised. Both deals and several others have been standout successes.

More broadly, Nadella brought a new leadership style for a new environment. In a company known for vicious infighting that could paralyze action, he settled long-running debates over major projects. For example, in 2016 he sold the Nokia cell phone business that Microsoft had bought a year before he became CEO, acknowledging that the company had lost the battle for phones. “People don’t quite grok why things have blossomed under Satya,” says a former executive. “His superpower is to make a choice, eliminate conflict, and let the business blossom.”

At Intel, Gelsinger also introduced culture-defying changes. The company had risen to dominance by designing leading-edge chips and manufacturing them with industry-leading skill. Amid that intense pride, the idea of creating a separate foundry business—manufacturing chips designed by others—was anathema. Yet under Gelsinger, Intel has created a new foundry business while also relying more on other foundries, including TSMC, the world’s largest chipmaker, for some of its own chips—a double shock to the culture.

Getting a long-established company with a titanium-strength culture to adopt seemingly strange business models as Nadella and Gelsinger did can be painfully hard. Often only a new CEO can bring the openness necessary to make it happen. The same problem arises when a company needs to update its corporate strategy. Microsoft had been seeking and debating the next big thing for years, but Nadella saw that the company didn’t need to find a potentially huge new future-facing business. It already had one: Azure, its cloud computing service. Amazon Web Services was and is the industry leader, but Azure has grown to a strong No. 2 because Nadella has given it abundant capital and some of the company’s brightest workers. He also made an unorthodox investment in OpenAI, creator of ChatGPT, commiting $13 billion to the company starting before it was famous. Now Azure offers its customers OpenAI technology. In Drucker’s terms, it’s a big, thriving tomorrow business.

Gelsinger changed Intel’s strategy even more radically. He bet heavily and successfully on billions of dollars from the U.S. government. Via the CHIPS and Science Act, Intel could receive up to $44 billion in aid for new U.S. chip factories the company is building in coming years. “As I like to joke, no one has spent more shoe leather on the CHIPS Act than yours truly,” he tells Fortune. “I saw an awful lot of senators, House members, caucuses in the different states. It’s a lot to bring it across the line.”

A key insight is that for a major company with a history of success, like Microsoft and Intel, moving beyond an outmoded strategy and fully embracing a new one is traumatically difficult and sometimes impossible. For years both companies tried and failed to do it. A related insight: Doing it is easier for Nadella and Gelsinger because they have the advantage of being “insider outsiders,” leaders with deep knowledge of their organization but without heavy investment in its strategy; Nadella was working on Azure, not the Windows operating system or Office apps, long before he became CEO, and Gelsinger’s 11-year absence from Intel gave him license to rethink everything.

A larger lesson is that, in the stories of these two great companies, succession is the most important factor. Considering that Microsoft on the whole has fared better than Intel over the past 24 years, it’s significant that over that period, Microsoft has had only two CEOs and Intel has had five. Most people study the CEO when explaining a company’s performance, but they should first examine those who choose the CEO, the board of directors.

Looking back at these stories, asking “what if” is irresistible. What if Paul Otellini had said yes to Steve Jobs? What if any of Intel’s or Microsoft’s CEOs had been someone else? What if Intel, under a different CEO, had developed a successful GPU, the kind of chip that powers today’s AI engines (it tried)—would you ever have heard of Nvidia? Bill Gates said in 2019, “We missed being the dominant mobile operating system by a very tiny amount.” What if that tiny amount had shifted slightly? Whose phone would you be using today?

It’s all endlessly tantalizing but of course unknowable. The value of looking back and asking “what if,” is to remind us that every day leaders are creating the future—and neglecting their duty if they don’t learn from the past.

5 lessons from the Wintel case study:

1. Success can be a company’s worst enemy. The great management writer Peter Drucker said every company must “abandon yesterday” before it can “create tomorrow.” But in a successful company, every incentive pushes leaders to protect yesterday. Intel and Microsoft struggled for years to create their tomorrows. 2. Leaders must be open to business models that seem strange. Whether giving away software or manufacturing chips designed by others as a separate business, both Microsoft and Intel faced competitors doing things differently. 3. Get everyone on the same page. Debate is healthy up to a point, but at Microsoft it continued far too long until Nadella became CEO and set clear priorities. At Intel a series of CEOs backed differing solutions to its declining business, which prolonged a muddled strategy. 4. Succession is the board’s No. 1 job, more important than all its other jobs combined. Everyone knows it, but some boards still do their job poorly. If they make a mistake, none of the other lessons matter. Considering that Microsoft has come through the past 24 years better than Intel, it may be significant that Microsoft has had only two CEOs in that period while Intel has had five. 5. Failure isn’t fatal. The Wintel story is a pointed reminder that all companies, including the best, suffer failures and fall into crises. There are no exceptions. The leaders of any company, even the grandest, must always be ready to engage the skills of organizational rescue, and know that even that can be part of greatness.

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Post Office executives played a leading role in publicly defending their organisation over the hundreds of prosecutions it brought against the sub-postmasters who ran its branches, based on the flawed Horizon accounting system.

But, behind the scenes, it was in-house lawyers who took on the task of briefing senior executives on the robustness of its Horizon software. They were also responsible for commissioning relevant audits and setting out the UK state-owned organisation’s approach to litigation.

More than 900 people were convicted of a range of offences, including theft and false accounting, in cases involving data from Fujitsu’s flawed Horizon system, which was introduced in 1999. More than 700 prosecutions were brought by the Post Office itself.

However, it was another lawyer — James Hartley, partner and head of dispute resolution at law firm Freeths — who represented 555 of the sub-postmasters in a landmark 2019 High Court case in which the extent of the IT scandal emerged. The judge ruled that several “bugs, errors and defects” meant there was a “material risk” that the Horizon system was to blame for faulty data used in the Post Office prosecutions.

“It’s quite a complex web of obligation, responsibility and culpability,” says Hartley, reflecting on the reach of the affair into the legal profession. “Somewhere along the way, lawyers have stepped over the red line.”

Now, a public inquiry into the scandal is gaining momentum as it takes evidence from senior Post Office executives, government ministers and figures from Fujitsu, ahead of its conclusion this summer.

In the coming months, the inquiry will hear testimony from several former general counsel at the Post Office, each of whom will give evidence against the backdrop of a debate about whether the role of an in-house lawyer needs to be more strictly regulated.

Susan Crichton, the Post Office’s general counsel between 2010 and 2013, will appear today at Aldwych House in London to respond to claims that, under her watch, the business brought prosecutions against sub-postmasters despite concerns surrounding Horizon.

Audio recordings shared with the inquiry, of conversations between Crichton and forensic accountants Second Sight in 2013, suggest she briefed the company’s chief executive that claims made by accused sub-postmasters about the Horizon system were, in fact, true.

Their discussions include the detail, long denied by the Post Office, that third parties could access systems remotely and alter transaction data. Sub-postmasters successfully argued in court that they could not be held solely responsible for any shortfalls because of this third-party access.

Crichton’s evidence is also expected to spell out some of the difficulties that existed for general counsel in raising concerns, particularly when executives fail to act in response.

Chris Aujard, Crichton’s successor, is scheduled to appear at the inquiry tomorrow. Jane MacLeod, who succeeded Aujard, is due to appear in June, shortly after current counsel Ben Foat takes the stand.

Somewhere along the way, lawyers have stepped over the red line James Hartley, Freeths

Contemporaneous documents suggest that there may have been opportunities for the Post Office to prevent litigation.

The Post Office’s general counsel were involved in commissioning half a dozen reports and reviews by external auditors and consultants, including BAE Systems, Deloitte, EY, and Second Sight, in the decade leading up to the 2019 High Court case.

Some of these reports found faults with internal systems and how they were managed. External lawyers in 2013 warned the Post Office that the business was at risk of breaching its obligations as a prosecutor over improper practices, if any decision were made to shred documents, which prevented disclosure.

Richard Moorhead, a professor of law and professional ethics at the University of Exeter, says matters should be reported “up the ladder” and that general counsel need to act as a “moral compass” within an organisation. “They need to speak up if they think things are being done which are improper and ensure the client hears those things,” he says.

Moorhead, who sits on the government-appointed Horizon Compensation Advisory Board, is a vocal critic of the lawyers involved in the Post Office Horizon scandal.

He adds that there were occasions when in-house lawyers at the Post Office should have sought to “blow the whistle” once it became obvious that errors in the Horizon system could account for shortfalls.

General counsel play a prominent role in shaping the legal strategy of a company or organisation and advising executives on the best approach to compliance and handling legal risk. But there is sometimes tension between serving the business and acting in the public’s interest.

In the aftermath of the Enron and WorldCom fraud scandals in the early 2000s, US regulators introduced new security laws that required general counsel to report adverse information to audit committees, directors and other officials when senior leadership was unresponsive.

[GCs] need to speak up if they think things are being done which are improper and ensure the client hears those things Richard Moorhead, University of Exeter

Brian Cheffins, a professor of corporate law at the University of Cambridge, says the new rules produced a playbook for in-house lawyers who had been “stonewalled internally”, particularly as these individuals could find themselves in “deep water” when misgovernance became evident.

But Cheffins is opposed to plans to set out general counsel’s obligations formally, and warns that doing so risks duplicating duties that already exist elsewhere.

General counsel in the UK operate under the same rules as any solicitor or barrister advising a client, which stipulate acting with integrity in ensuring that senior figures are briefed on unpalatable information. The Horizon affair has reminded lawyers of their duties when advising executives.

Hartley says: “In-house lawyers need to recalibrate their thinking on where that red line is so they know when to turn around to the person they’re advising and say, ‘No, we cannot do that’.”

Post Office general counsel: in the spotlight

Susan Crichton In 2012-2013 she was involved in instructing Second Sight to conduct an independent investigation into Horizon. The forensic accountants raised concerns but these were not actioned by the business despite executives being briefed. Crichton left the Post Office to take on a similar role at TSB Bank in 2013; she retired in 2018.

Chris Aujard After becoming general counsel in 2013, he was tasked with winding down a mediation scheme set up for affected sub-postmasters and removing Second Sight from its role investigating the Post Office. Meeting minutes from 2014 showed he was present when executives discussed setting aside £1mn in “token payments” to mitigate any reputational damage.

Jane MacLeod In position as general counsel when 555 sub-postmasters brought a suit against the Post Office, MacLeod was responsible for overseeing the business’s initial response. The public inquiry will explore her handling of disclosure and response to litigation when she gives evidence in June. She resigned from the Post Office in 2019.

Ben Foat Appointed to general counsel in 2019, Foat previously served as the business’s legal director. He appeared at the inquiry in the middle of last year after widespread disclosure failures resulted in weeks of delays to evidence. Sir Wyn Williams, chair of the inquiry, has since threatened officials with criminal penalties if such problems recur.

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Research ethics and artificial intelligence for global health: perspectives from the global forum on bioethics in research

James Shaw 1 , 13 ,
Joseph Ali 2 , 3 ,
Caesar A. Atuire 4 , 5 ,
Phaik Yeong Cheah 6 ,
Armando Guio Español 7 ,
Judy Wawira Gichoya 8 ,
Adrienne Hunt 9 ,
Daudi Jjingo 10 ,
Katherine Littler 9 ,
Daniela Paolotti 11 &
Effy Vayena 12

BMC Medical Ethics volume 25 , Article number: 46 ( 2024 ) Cite this article

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The ethical governance of Artificial Intelligence (AI) in health care and public health continues to be an urgent issue for attention in policy, research, and practice. In this paper we report on central themes related to challenges and strategies for promoting ethics in research involving AI in global health, arising from the Global Forum on Bioethics in Research (GFBR), held in Cape Town, South Africa in November 2022.

The GFBR is an annual meeting organized by the World Health Organization and supported by the Wellcome Trust, the US National Institutes of Health, the UK Medical Research Council (MRC) and the South African MRC. The forum aims to bring together ethicists, researchers, policymakers, research ethics committee members and other actors to engage with challenges and opportunities specifically related to research ethics. In 2022 the focus of the GFBR was “Ethics of AI in Global Health Research”. The forum consisted of 6 case study presentations, 16 governance presentations, and a series of small group and large group discussions. A total of 87 participants attended the forum from 31 countries around the world, representing disciplines of bioethics, AI, health policy, health professional practice, research funding, and bioinformatics. In this paper, we highlight central insights arising from GFBR 2022.

We describe the significance of four thematic insights arising from the forum: (1) Appropriateness of building AI, (2) Transferability of AI systems, (3) Accountability for AI decision-making and outcomes, and (4) Individual consent. We then describe eight recommendations for governance leaders to enhance the ethical governance of AI in global health research, addressing issues such as AI impact assessments, environmental values, and fair partnerships.

Conclusions

The 2022 Global Forum on Bioethics in Research illustrated several innovations in ethical governance of AI for global health research, as well as several areas in need of urgent attention internationally. This summary is intended to inform international and domestic efforts to strengthen research ethics and support the evolution of governance leadership to meet the demands of AI in global health research.

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Introduction

The ethical governance of Artificial Intelligence (AI) in health care and public health continues to be an urgent issue for attention in policy, research, and practice [ 1 , 2 , 3 ]. Beyond the growing number of AI applications being implemented in health care, capabilities of AI models such as Large Language Models (LLMs) expand the potential reach and significance of AI technologies across health-related fields [ 4 , 5 ]. Discussion about effective, ethical governance of AI technologies has spanned a range of governance approaches, including government regulation, organizational decision-making, professional self-regulation, and research ethics review [ 6 , 7 , 8 ]. In this paper, we report on central themes related to challenges and strategies for promoting ethics in research involving AI in global health research, arising from the Global Forum on Bioethics in Research (GFBR), held in Cape Town, South Africa in November 2022. Although applications of AI for research, health care, and public health are diverse and advancing rapidly, the insights generated at the forum remain highly relevant from a global health perspective. After summarizing important context for work in this domain, we highlight categories of ethical issues emphasized at the forum for attention from a research ethics perspective internationally. We then outline strategies proposed for research, innovation, and governance to support more ethical AI for global health.

In this paper, we adopt the definition of AI systems provided by the Organization for Economic Cooperation and Development (OECD) as our starting point. Their definition states that an AI system is “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments. AI systems are designed to operate with varying levels of autonomy” [ 9 ]. The conceptualization of an algorithm as helping to constitute an AI system, along with hardware, other elements of software, and a particular context of use, illustrates the wide variety of ways in which AI can be applied. We have found it useful to differentiate applications of AI in research as those classified as “AI systems for discovery” and “AI systems for intervention”. An AI system for discovery is one that is intended to generate new knowledge, for example in drug discovery or public health research in which researchers are seeking potential targets for intervention, innovation, or further research. An AI system for intervention is one that directly contributes to enacting an intervention in a particular context, for example informing decision-making at the point of care or assisting with accuracy in a surgical procedure.

The mandate of the GFBR is to take a broad view of what constitutes research and its regulation in global health, with special attention to bioethics in Low- and Middle- Income Countries. AI as a group of technologies demands such a broad view. AI development for health occurs in a variety of environments, including universities and academic health sciences centers where research ethics review remains an important element of the governance of science and innovation internationally [ 10 , 11 ]. In these settings, research ethics committees (RECs; also known by different names such as Institutional Review Boards or IRBs) make decisions about the ethical appropriateness of projects proposed by researchers and other institutional members, ultimately determining whether a given project is allowed to proceed on ethical grounds [ 12 ].

However, research involving AI for health also takes place in large corporations and smaller scale start-ups, which in some jurisdictions fall outside the scope of research ethics regulation. In the domain of AI, the question of what constitutes research also becomes blurred. For example, is the development of an algorithm itself considered a part of the research process? Or only when that algorithm is tested under the formal constraints of a systematic research methodology? In this paper we take an inclusive view, in which AI development is included in the definition of research activity and within scope for our inquiry, regardless of the setting in which it takes place. This broad perspective characterizes the approach to “research ethics” we take in this paper, extending beyond the work of RECs to include the ethical analysis of the wide range of activities that constitute research as the generation of new knowledge and intervention in the world.

Ethical governance of AI in global health

The ethical governance of AI for global health has been widely discussed in recent years. The World Health Organization (WHO) released its guidelines on ethics and governance of AI for health in 2021, endorsing a set of six ethical principles and exploring the relevance of those principles through a variety of use cases. The WHO guidelines also provided an overview of AI governance, defining governance as covering “a range of steering and rule-making functions of governments and other decision-makers, including international health agencies, for the achievement of national health policy objectives conducive to universal health coverage.” (p. 81) The report usefully provided a series of recommendations related to governance of seven domains pertaining to AI for health: data, benefit sharing, the private sector, the public sector, regulation, policy observatories/model legislation, and global governance. The report acknowledges that much work is yet to be done to advance international cooperation on AI governance, especially related to prioritizing voices from Low- and Middle-Income Countries (LMICs) in global dialogue.

One important point emphasized in the WHO report that reinforces the broader literature on global governance of AI is the distribution of responsibility across a wide range of actors in the AI ecosystem. This is especially important to highlight when focused on research for global health, which is specifically about work that transcends national borders. Alami et al. (2020) discussed the unique risks raised by AI research in global health, ranging from the unavailability of data in many LMICs required to train locally relevant AI models to the capacity of health systems to absorb new AI technologies that demand the use of resources from elsewhere in the system. These observations illustrate the need to identify the unique issues posed by AI research for global health specifically, and the strategies that can be employed by all those implicated in AI governance to promote ethically responsible use of AI in global health research.

RECs and the regulation of research involving AI

RECs represent an important element of the governance of AI for global health research, and thus warrant further commentary as background to our paper. Despite the importance of RECs, foundational questions have been raised about their capabilities to accurately understand and address ethical issues raised by studies involving AI. Rahimzadeh et al. (2023) outlined how RECs in the United States are under-prepared to align with recent federal policy requiring that RECs review data sharing and management plans with attention to the unique ethical issues raised in AI research for health [ 13 ]. Similar research in South Africa identified variability in understanding of existing regulations and ethical issues associated with health-related big data sharing and management among research ethics committee members [ 14 , 15 ]. The effort to address harms accruing to groups or communities as opposed to individuals whose data are included in AI research has also been identified as a unique challenge for RECs [ 16 , 17 ]. Doerr and Meeder (2022) suggested that current regulatory frameworks for research ethics might actually prevent RECs from adequately addressing such issues, as they are deemed out of scope of REC review [ 16 ]. Furthermore, research in the United Kingdom and Canada has suggested that researchers using AI methods for health tend to distinguish between ethical issues and social impact of their research, adopting an overly narrow view of what constitutes ethical issues in their work [ 18 ].

The challenges for RECs in adequately addressing ethical issues in AI research for health care and public health exceed a straightforward survey of ethical considerations. As Ferretti et al. (2021) contend, some capabilities of RECs adequately cover certain issues in AI-based health research, such as the common occurrence of conflicts of interest where researchers who accept funds from commercial technology providers are implicitly incentivized to produce results that align with commercial interests [ 12 ]. However, some features of REC review require reform to adequately meet ethical needs. Ferretti et al. outlined weaknesses of RECs that are longstanding and those that are novel to AI-related projects, proposing a series of directions for development that are regulatory, procedural, and complementary to REC functionality. The work required on a global scale to update the REC function in response to the demands of research involving AI is substantial.

These issues take greater urgency in the context of global health [ 19 ]. Teixeira da Silva (2022) described the global practice of “ethics dumping”, where researchers from high income countries bring ethically contentious practices to RECs in low-income countries as a strategy to gain approval and move projects forward [ 20 ]. Although not yet systematically documented in AI research for health, risk of ethics dumping in AI research is high. Evidence is already emerging of practices of “health data colonialism”, in which AI researchers and developers from large organizations in high-income countries acquire data to build algorithms in LMICs to avoid stricter regulations [ 21 ]. This specific practice is part of a larger collection of practices that characterize health data colonialism, involving the broader exploitation of data and the populations they represent primarily for commercial gain [ 21 , 22 ]. As an additional complication, AI algorithms trained on data from high-income contexts are unlikely to apply in straightforward ways to LMIC settings [ 21 , 23 ]. In the context of global health, there is widespread acknowledgement about the need to not only enhance the knowledge base of REC members about AI-based methods internationally, but to acknowledge the broader shifts required to encourage their capabilities to more fully address these and other ethical issues associated with AI research for health [ 8 ].

Although RECs are an important part of the story of the ethical governance of AI for global health research, they are not the only part. The responsibilities of supra-national entities such as the World Health Organization, national governments, organizational leaders, commercial AI technology providers, health care professionals, and other groups continue to be worked out internationally. In this context of ongoing work, examining issues that demand attention and strategies to address them remains an urgent and valuable task.

The GFBR is an annual meeting organized by the World Health Organization and supported by the Wellcome Trust, the US National Institutes of Health, the UK Medical Research Council (MRC) and the South African MRC. The forum aims to bring together ethicists, researchers, policymakers, REC members and other actors to engage with challenges and opportunities specifically related to research ethics. Each year the GFBR meeting includes a series of case studies and keynotes presented in plenary format to an audience of approximately 100 people who have applied and been competitively selected to attend, along with small-group breakout discussions to advance thinking on related issues. The specific topic of the forum changes each year, with past topics including ethical issues in research with people living with mental health conditions (2021), genome editing (2019), and biobanking/data sharing (2018). The forum is intended to remain grounded in the practical challenges of engaging in research ethics, with special interest in low resource settings from a global health perspective. A post-meeting fellowship scheme is open to all LMIC participants, providing a unique opportunity to apply for funding to further explore and address the ethical challenges that are identified during the meeting.

In 2022, the focus of the GFBR was “Ethics of AI in Global Health Research”. The forum consisted of 6 case study presentations (both short and long form) reporting on specific initiatives related to research ethics and AI for health, and 16 governance presentations (both short and long form) reporting on actual approaches to governing AI in different country settings. A keynote presentation from Professor Effy Vayena addressed the topic of the broader context for AI ethics in a rapidly evolving field. A total of 87 participants attended the forum from 31 countries around the world, representing disciplines of bioethics, AI, health policy, health professional practice, research funding, and bioinformatics. The 2-day forum addressed a wide range of themes. The conference report provides a detailed overview of each of the specific topics addressed while a policy paper outlines the cross-cutting themes (both documents are available at the GFBR website: https://www.gfbr.global/past-meetings/16th-forum-cape-town-south-africa-29-30-november-2022/ ). As opposed to providing a detailed summary in this paper, we aim to briefly highlight central issues raised, solutions proposed, and the challenges facing the research ethics community in the years to come.

In this way, our primary aim in this paper is to present a synthesis of the challenges and opportunities raised at the GFBR meeting and in the planning process, followed by our reflections as a group of authors on their significance for governance leaders in the coming years. We acknowledge that the views represented at the meeting and in our results are a partial representation of the universe of views on this topic; however, the GFBR leadership invested a great deal of resources in convening a deeply diverse and thoughtful group of researchers and practitioners working on themes of bioethics related to AI for global health including those based in LMICs. We contend that it remains rare to convene such a strong group for an extended time and believe that many of the challenges and opportunities raised demand attention for more ethical futures of AI for health. Nonetheless, our results are primarily descriptive and are thus not explicitly grounded in a normative argument. We make effort in the Discussion section to contextualize our results by describing their significance and connecting them to broader efforts to reform global health research and practice.

Uniquely important ethical issues for AI in global health research

Presentations and group dialogue over the course of the forum raised several issues for consideration, and here we describe four overarching themes for the ethical governance of AI in global health research. Brief descriptions of each issue can be found in Table 1 . Reports referred to throughout the paper are available at the GFBR website provided above.

The first overarching thematic issue relates to the appropriateness of building AI technologies in response to health-related challenges in the first place. Case study presentations referred to initiatives where AI technologies were highly appropriate, such as in ear shape biometric identification to more accurately link electronic health care records to individual patients in Zambia (Alinani Simukanga). Although important ethical issues were raised with respect to privacy, trust, and community engagement in this initiative, the AI-based solution was appropriately matched to the challenge of accurately linking electronic records to specific patient identities. In contrast, forum participants raised questions about the appropriateness of an initiative using AI to improve the quality of handwashing practices in an acute care hospital in India (Niyoshi Shah), which led to gaming the algorithm. Overall, participants acknowledged the dangers of techno-solutionism, in which AI researchers and developers treat AI technologies as the most obvious solutions to problems that in actuality demand much more complex strategies to address [ 24 ]. However, forum participants agreed that RECs in different contexts have differing degrees of power to raise issues of the appropriateness of an AI-based intervention.

The second overarching thematic issue related to whether and how AI-based systems transfer from one national health context to another. One central issue raised by a number of case study presentations related to the challenges of validating an algorithm with data collected in a local environment. For example, one case study presentation described a project that would involve the collection of personally identifiable data for sensitive group identities, such as tribe, clan, or religion, in the jurisdictions involved (South Africa, Nigeria, Tanzania, Uganda and the US; Gakii Masunga). Doing so would enable the team to ensure that those groups were adequately represented in the dataset to ensure the resulting algorithm was not biased against specific community groups when deployed in that context. However, some members of these communities might desire to be represented in the dataset, whereas others might not, illustrating the need to balance autonomy and inclusivity. It was also widely recognized that collecting these data is an immense challenge, particularly when historically oppressive practices have led to a low-trust environment for international organizations and the technologies they produce. It is important to note that in some countries such as South Africa and Rwanda, it is illegal to collect information such as race and tribal identities, re-emphasizing the importance for cultural awareness and avoiding “one size fits all” solutions.

The third overarching thematic issue is related to understanding accountabilities for both the impacts of AI technologies and governance decision-making regarding their use. Where global health research involving AI leads to longer-term harms that might fall outside the usual scope of issues considered by a REC, who is to be held accountable, and how? This question was raised as one that requires much further attention, with law being mixed internationally regarding the mechanisms available to hold researchers, innovators, and their institutions accountable over the longer term. However, it was recognized in breakout group discussion that many jurisdictions are developing strong data protection regimes related specifically to international collaboration for research involving health data. For example, Kenya’s Data Protection Act requires that any internationally funded projects have a local principal investigator who will hold accountability for how data are shared and used [ 25 ]. The issue of research partnerships with commercial entities was raised by many participants in the context of accountability, pointing toward the urgent need for clear principles related to strategies for engagement with commercial technology companies in global health research.

The fourth and final overarching thematic issue raised here is that of consent. The issue of consent was framed by the widely shared recognition that models of individual, explicit consent might not produce a supportive environment for AI innovation that relies on the secondary uses of health-related datasets to build AI algorithms. Given this recognition, approaches such as community oversight of health data uses were suggested as a potential solution. However, the details of implementing such community oversight mechanisms require much further attention, particularly given the unique perspectives on health data in different country settings in global health research. Furthermore, some uses of health data do continue to require consent. One case study of South Africa, Nigeria, Kenya, Ethiopia and Uganda suggested that when health data are shared across borders, individual consent remains necessary when data is transferred from certain countries (Nezerith Cengiz). Broader clarity is necessary to support the ethical governance of health data uses for AI in global health research.

Recommendations for ethical governance of AI in global health research

Dialogue at the forum led to a range of suggestions for promoting ethical conduct of AI research for global health, related to the various roles of actors involved in the governance of AI research broadly defined. The strategies are written for actors we refer to as “governance leaders”, those people distributed throughout the AI for global health research ecosystem who are responsible for ensuring the ethical and socially responsible conduct of global health research involving AI (including researchers themselves). These include RECs, government regulators, health care leaders, health professionals, corporate social accountability officers, and others. Enacting these strategies would bolster the ethical governance of AI for global health more generally, enabling multiple actors to fulfill their roles related to governing research and development activities carried out across multiple organizations, including universities, academic health sciences centers, start-ups, and technology corporations. Specific suggestions are summarized in Table 2 .

First, forum participants suggested that governance leaders including RECs, should remain up to date on recent advances in the regulation of AI for health. Regulation of AI for health advances rapidly and takes on different forms in jurisdictions around the world. RECs play an important role in governance, but only a partial role; it was deemed important for RECs to acknowledge how they fit within a broader governance ecosystem in order to more effectively address the issues within their scope. Not only RECs but organizational leaders responsible for procurement, researchers, and commercial actors should all commit to efforts to remain up to date about the relevant approaches to regulating AI for health care and public health in jurisdictions internationally. In this way, governance can more adequately remain up to date with advances in regulation.

Second, forum participants suggested that governance leaders should focus on ethical governance of health data as a basis for ethical global health AI research. Health data are considered the foundation of AI development, being used to train AI algorithms for various uses [ 26 ]. By focusing on ethical governance of health data generation, sharing, and use, multiple actors will help to build an ethical foundation for AI development among global health researchers.

Third, forum participants believed that governance processes should incorporate AI impact assessments where appropriate. An AI impact assessment is the process of evaluating the potential effects, both positive and negative, of implementing an AI algorithm on individuals, society, and various stakeholders, generally over time frames specified in advance of implementation [ 27 ]. Although not all types of AI research in global health would warrant an AI impact assessment, this is especially relevant for those studies aiming to implement an AI system for intervention into health care or public health. Organizations such as RECs can use AI impact assessments to boost understanding of potential harms at the outset of a research project, encouraging researchers to more deeply consider potential harms in the development of their study.

Fourth, forum participants suggested that governance decisions should incorporate the use of environmental impact assessments, or at least the incorporation of environment values when assessing the potential impact of an AI system. An environmental impact assessment involves evaluating and anticipating the potential environmental effects of a proposed project to inform ethical decision-making that supports sustainability [ 28 ]. Although a relatively new consideration in research ethics conversations [ 29 ], the environmental impact of building technologies is a crucial consideration for the public health commitment to environmental sustainability. Governance leaders can use environmental impact assessments to boost understanding of potential environmental harms linked to AI research projects in global health over both the shorter and longer terms.

Fifth, forum participants suggested that governance leaders should require stronger transparency in the development of AI algorithms in global health research. Transparency was considered essential in the design and development of AI algorithms for global health to ensure ethical and accountable decision-making throughout the process. Furthermore, whether and how researchers have considered the unique contexts into which such algorithms may be deployed can be surfaced through stronger transparency, for example in describing what primary considerations were made at the outset of the project and which stakeholders were consulted along the way. Sharing information about data provenance and methods used in AI development will also enhance the trustworthiness of the AI-based research process.

Sixth, forum participants suggested that governance leaders can encourage or require community engagement at various points throughout an AI project. It was considered that engaging patients and communities is crucial in AI algorithm development to ensure that the technology aligns with community needs and values. However, participants acknowledged that this is not a straightforward process. Effective community engagement requires lengthy commitments to meeting with and hearing from diverse communities in a given setting, and demands a particular set of skills in communication and dialogue that are not possessed by all researchers. Encouraging AI researchers to begin this process early and build long-term partnerships with community members is a promising strategy to deepen community engagement in AI research for global health. One notable recommendation was that research funders have an opportunity to incentivize and enable community engagement with funds dedicated to these activities in AI research in global health.

Seventh, forum participants suggested that governance leaders can encourage researchers to build strong, fair partnerships between institutions and individuals across country settings. In a context of longstanding imbalances in geopolitical and economic power, fair partnerships in global health demand a priori commitments to share benefits related to advances in medical technologies, knowledge, and financial gains. Although enforcement of this point might be beyond the remit of RECs, commentary will encourage researchers to consider stronger, fairer partnerships in global health in the longer term.

Eighth, it became evident that it is necessary to explore new forms of regulatory experimentation given the complexity of regulating a technology of this nature. In addition, the health sector has a series of particularities that make it especially complicated to generate rules that have not been previously tested. Several participants highlighted the desire to promote spaces for experimentation such as regulatory sandboxes or innovation hubs in health. These spaces can have several benefits for addressing issues surrounding the regulation of AI in the health sector, such as: (i) increasing the capacities and knowledge of health authorities about this technology; (ii) identifying the major problems surrounding AI regulation in the health sector; (iii) establishing possibilities for exchange and learning with other authorities; (iv) promoting innovation and entrepreneurship in AI in health; and (vi) identifying the need to regulate AI in this sector and update other existing regulations.

Ninth and finally, forum participants believed that the capabilities of governance leaders need to evolve to better incorporate expertise related to AI in ways that make sense within a given jurisdiction. With respect to RECs, for example, it might not make sense for every REC to recruit a member with expertise in AI methods. Rather, it will make more sense in some jurisdictions to consult with members of the scientific community with expertise in AI when research protocols are submitted that demand such expertise. Furthermore, RECs and other approaches to research governance in jurisdictions around the world will need to evolve in order to adopt the suggestions outlined above, developing processes that apply specifically to the ethical governance of research using AI methods in global health.

Research involving the development and implementation of AI technologies continues to grow in global health, posing important challenges for ethical governance of AI in global health research around the world. In this paper we have summarized insights from the 2022 GFBR, focused specifically on issues in research ethics related to AI for global health research. We summarized four thematic challenges for governance related to AI in global health research and nine suggestions arising from presentations and dialogue at the forum. In this brief discussion section, we present an overarching observation about power imbalances that frames efforts to evolve the role of governance in global health research, and then outline two important opportunity areas as the field develops to meet the challenges of AI in global health research.

Dialogue about power is not unfamiliar in global health, especially given recent contributions exploring what it would mean to de-colonize global health research, funding, and practice [ 30 , 31 ]. Discussions of research ethics applied to AI research in global health contexts are deeply infused with power imbalances. The existing context of global health is one in which high-income countries primarily located in the “Global North” charitably invest in projects taking place primarily in the “Global South” while recouping knowledge, financial, and reputational benefits [ 32 ]. With respect to AI development in particular, recent examples of digital colonialism frame dialogue about global partnerships, raising attention to the role of large commercial entities and global financial capitalism in global health research [ 21 , 22 ]. Furthermore, the power of governance organizations such as RECs to intervene in the process of AI research in global health varies widely around the world, depending on the authorities assigned to them by domestic research governance policies. These observations frame the challenges outlined in our paper, highlighting the difficulties associated with making meaningful change in this field.

Despite these overarching challenges of the global health research context, there are clear strategies for progress in this domain. Firstly, AI innovation is rapidly evolving, which means approaches to the governance of AI for health are rapidly evolving too. Such rapid evolution presents an important opportunity for governance leaders to clarify their vision and influence over AI innovation in global health research, boosting the expertise, structure, and functionality required to meet the demands of research involving AI. Secondly, the research ethics community has strong international ties, linked to a global scholarly community that is committed to sharing insights and best practices around the world. This global community can be leveraged to coordinate efforts to produce advances in the capabilities and authorities of governance leaders to meaningfully govern AI research for global health given the challenges summarized in our paper.

Limitations

Our paper includes two specific limitations that we address explicitly here. First, it is still early in the lifetime of the development of applications of AI for use in global health, and as such, the global community has had limited opportunity to learn from experience. For example, there were many fewer case studies, which detail experiences with the actual implementation of an AI technology, submitted to GFBR 2022 for consideration than was expected. In contrast, there were many more governance reports submitted, which detail the processes and outputs of governance processes that anticipate the development and dissemination of AI technologies. This observation represents both a success and a challenge. It is a success that so many groups are engaging in anticipatory governance of AI technologies, exploring evidence of their likely impacts and governing technologies in novel and well-designed ways. It is a challenge that there is little experience to build upon of the successful implementation of AI technologies in ways that have limited harms while promoting innovation. Further experience with AI technologies in global health will contribute to revising and enhancing the challenges and recommendations we have outlined in our paper.

Second, global trends in the politics and economics of AI technologies are evolving rapidly. Although some nations are advancing detailed policy approaches to regulating AI more generally, including for uses in health care and public health, the impacts of corporate investments in AI and political responses related to governance remain to be seen. The excitement around large language models (LLMs) and large multimodal models (LMMs) has drawn deeper attention to the challenges of regulating AI in any general sense, opening dialogue about health sector-specific regulations. The direction of this global dialogue, strongly linked to high-profile corporate actors and multi-national governance institutions, will strongly influence the development of boundaries around what is possible for the ethical governance of AI for global health. We have written this paper at a point when these developments are proceeding rapidly, and as such, we acknowledge that our recommendations will need updating as the broader field evolves.

Ultimately, coordination and collaboration between many stakeholders in the research ethics ecosystem will be necessary to strengthen the ethical governance of AI in global health research. The 2022 GFBR illustrated several innovations in ethical governance of AI for global health research, as well as several areas in need of urgent attention internationally. This summary is intended to inform international and domestic efforts to strengthen research ethics and support the evolution of governance leadership to meet the demands of AI in global health research.

Data availability

All data and materials analyzed to produce this paper are available on the GFBR website: https://www.gfbr.global/past-meetings/16th-forum-cape-town-south-africa-29-30-november-2022/ .

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Acknowledgements

We would like to acknowledge the outstanding contributions of the attendees of GFBR 2022 in Cape Town, South Africa. This paper is authored by members of the GFBR 2022 Planning Committee. We would like to acknowledge additional members Tamra Lysaght, National University of Singapore, and Niresh Bhagwandin, South African Medical Research Council, for their input during the planning stages and as reviewers of the applications to attend the Forum.

This work was supported by Wellcome [222525/Z/21/Z], the US National Institutes of Health, the UK Medical Research Council (part of UK Research and Innovation), and the South African Medical Research Council through funding to the Global Forum on Bioethics in Research.

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Berman Institute of Bioethics, Johns Hopkins University, Baltimore, MD, USA

Bloomberg School of Public Health, Johns Hopkins University, Baltimore, MD, USA

Department of Philosophy and Classics, University of Ghana, Legon-Accra, Ghana

Caesar A. Atuire

Centre for Tropical Medicine and Global Health, Nuffield Department of Medicine, University of Oxford, Oxford, UK

Mahidol Oxford Tropical Medicine Research Unit, Faculty of Tropical Medicine, Mahidol University, Bangkok, Thailand

Phaik Yeong Cheah

Berkman Klein Center, Harvard University, Bogotá, Colombia

Armando Guio Español

Department of Radiology and Informatics, Emory University School of Medicine, Atlanta, GA, USA

Judy Wawira Gichoya

Health Ethics & Governance Unit, Research for Health Department, Science Division, World Health Organization, Geneva, Switzerland

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Daudi Jjingo

ISI Foundation, Turin, Italy

Daniela Paolotti

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Effy Vayena

Joint Centre for Bioethics, Dalla Lana School of Public Health, University of Toronto, Toronto, Canada

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JS led the writing, contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. JA contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. CA contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. PYC contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. AE contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. JWG contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. AH contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. DJ contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. KL contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. DP contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper. EV contributed to conceptualization and analysis, critically reviewed and provided feedback on drafts of this paper, and provided final approval of the paper.

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Shaw, J., Ali, J., Atuire, C.A. et al. Research ethics and artificial intelligence for global health: perspectives from the global forum on bioethics in research. BMC Med Ethics 25 , 46 (2024). https://doi.org/10.1186/s12910-024-01044-w

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