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Microsoft Town Hall Jan 21 Transcript

The following is a partial transcript of an employee town hall held by Microsoft on January 21, 2021. Participants in the town hall included Microsoft CEO Satya Nadella, Microsoft President Brad Smith, and Kurt DelBene, executive vice president of corporate strategy. The event moderator was Nichole Christie. A video of the town hll was made available to me by a source at Microsoft, and I have transcribed Smith's comments on the company PAC here verbatim.

Comments and shouts into the void in brackets in italics are mine.

My contact info is / 415 610 0231 on Signal.

NICOLE CHRISTIE: The Microsoft political action committee, or MS-PAC. We're hearing about this on a variety of channels, so it is our first question, and this one comes from Yammer.

"Please advise what actions MS-PAC will make to address donations made to politicians involved in the effort to derail the certification of Electoral College votes on January 6. Microsoft employees support our company culture and values, and follow our code of conduct. MS-PAC dollars should not be given to politicians or organizations who don't share those values. Brad, can you speak to this?

BRAD SMITH: "Thank you, Nicole, and it's obviously an important question. I don't want to repeat but I do want to build upon what Satya has said. Jan 6, the attack on the Capitol, was a horrific day for all of us, whether we're in the United States or somewhere else, and I think it was even more difficult, say, for our black employees and our Jewish employees given the hateful symbols that were on display.

"This has obvious implications for the future donations of the PAC. We took stock of our donations over the last four years and we found that 80% of the dontions had gone to members of Congress who voted to uphold the Electoral College, and 20% had gone to members who voted against the Electoral College,"

[It's not clear if this is an accounting of dollar figures, or a count of donations. It's also not clear if Smith is counting donations to leadership PACs and other PACs, which fan out to multiple members of Congress. You can see a spreadsheet of donations made by Microsoft and other tech companies to the 147 members of congress who voted to overturn the Electoral College here.]

SMITH: "So now there's a process to decide what to do. The questions that are being considered are exactly I think what you would expect. Should the PAC suspend donations to the members who voted against the Electoral College? If so, for how long?"

[Microsoft had previously suspended political giving in summer of 2019, when the then-head of the PAC suggested to employees in an internal forum that even discussing the PAC with coworkers might constitute harassment. This comment came in the context of an employee effort to defund the PAC, and caused considerable internal uproar. The head of the PAC left Microsoft shortly thereafter in unclear circumstances. The company resumed its political giving in October 2019.]

SMITH: "Should it even take stronger steps with respect to members who led that effort or who fed disinformation, in our view, to the American public. These are among the questions that are being considered. Now, the PAC pauses donations at the beginning of every new Congress, but this is not a normal year."

[Smith makes an important point here—the decision by many Fortune 500 companies to suspend political giving in the aftermath of the January 6 catastrophe has little practical impact, since corporate donations are typically not made in the first months of a new electoral cycle. Only a very few companies, like Nike, have committed to permanently withholding donations from legislators who voted to overturn the Electoral College vote.]

SMITH: "And so we're engaging in additional steps to really think this through. And the heart of this is really to have a series of virtual meetings with employees, because I think it's important to get employee feedback and have a conversation together before these decisions are made."

[In the past, Microsoft limited discussions of PAC giving to actual or potential PAC donors, which automatically excluded the company's DACA and non-US employees, who are prohibited by law from making political contributions, but who were the most directly affected by the company's political giving. It's not clear whether the current round of discussions will be open to everyone or again limited in this way.]

SMITH: "Now I definitely appreciate, especially for people outside the United States, you might be following all this and wondering 'what are we talking about? What is this thing called a PAC? So I did want to take a moment just to give you a little bit more context."

"A PAC is a political action committee, and it reflects first of all the fact that in the Untied States, political campaigns are privately funded. We've been one of many that have long encouraged more public funding to get money out of politics, but it does pay for campaigns. A campaign for the House of Representatives of the United States typically costs millions of dollars; a campaign for the Senate costs tens of millions of dollars."

[Smith does not mention state races, where Microsoft, almost alone among big tech companies, also makes substantial contributions.]

SMITH: "Now a PAC if you really look at it doesn't actually contribute that much money. It's paid for entirely by voluntary donations. 91% of the Fortune 100 have a PAC; 75% of the Fortune 500 have a PAC."

[Donations to PACs at large companies are typically done by paycheck deduction. Depending on the company, there can be considerable pressure to make these 'voluntary' donations, particularly among senior executives. Apple and IBM stand apart from the other tech giants by not having a PAC.]

SMITH: "But the law says that they can only be funded by donations from employees, shareholders, and family members, and ours are, of no more than $5,000 a year. And the donations the PAC makes are actually small in the scheme of things as well. The PAC can contribute up to $5,000 for a primary election, and $5,000 for a general election. The decisions about who to donate to are made by a steering committee, and then there's an employee advisory committee and there's a broad network because we want everybody who donates voluntarily to be part of an ongoing conversation."

"The PAC makes donations based on four criteria:

"First, does the person have a job, a role, say on a committee that impacts our business?

"Second, does the person represent a geography where we have a significant employee presence?"

"Third, does the person advance policy goals that align with Microsoft's business policy objectives."

"And fourth, does the person share our values around diversity and inclusion?"

"So all four of things are considered when decisions about donations are made."

[Microsoft's donation history shows that the fourth criterion is not a veto point, but rather is weighted against the other three. Microsoft makes significant donations to members of Congress who are working to get Microsoft's own employees deported.]

SMITH: "I recognize that especially when you have times like this it's easy for people to ask the question, 'do we really need a PAC?' And I will acknowledge that I've asked that question myself over the last few years. 'Do we really need this PAC?' And I have to tell you, the answer is 'yes, we do'."

"I can tell you it plays an important role. Not because the checks are big, but because the way the political process works. Politicians in the United States have events, they have weekend retreats, you have to write a check and then you're invited and participate. So if you work in the government affairs team in the United States, you spend your weekends going to these events; you spend your evenings going to these dinners, and the reason you go is because the PAC writes a check."

"But out of that ongoing effort a relationship evolves and emerges and solidifies, and I can tell you as somebody who sometimes is picking up the phone, I'm sometimes calling members and asking for their help on green cards, or on visa issues, or help to get an employee or family member who is outside the United States during COVID back into the country because of an immigration restriction."

[The somewhat astonishing argument laid out here is that Microsoft needs to elect representatives who enact an anti-immigrant agenda in order to have the clout to win limited exemptions from that agenda for itself.]

SMITH: "Or the issues around national security, or privacy, or procurement reform. Or the tax issues that our finance team manages. And I can tell you, there are times when I call people who I don't personally know, and somebody will say "you know, your folks have always shown up for me at my events. And we have a good relationship. Let me see what I can do to help you"

"So I do believe it is important for our company to have this kind of effort. And at the same time, it's important for us to take stock of the recent events, get feedback, have a conversation, and make decisions that will continue to reflect where we stand, and the values that we believe are important. "

"So you'll see all of that unfold, with dialogue, with employees."

last updated january 2021