Microsoft’s Brad Smith explains what Zuckerberg did right, what Microsoft missed, and how the company has changed

One of the biggest mistakes of Microsoft’s antitrust era was not coming to terms sooner with the U.S. government, but Facebook seems to have learned at least part of that lesson.

That was one of the insights from Brad Smith, Microsoft’s president and chief legal officer, during a conversation with Recode’s Kara Swisher today at the Code Conference in Rancho Palos Verdes, Calif. It might seem like a history lesson, but there are lots of similarities between what Microsoft faced back then and what Facebook is grappling with today.

“At bottom a lot of what we’re seeing today is people asking the tech sector, do you get it?” Smith said. “Do you understand that perhaps in the history of business, there has never been an economic sector quite so intertwined with every other economic sector. And there’s never been an industry that has been so global. I think that frankly, one of the things that Mark Zuckerberg did well when he testified was he said, ‘We understand that regulation may be in order.’ It’s a way of saying, we understand that government has a role and we have a responsibility.

So what was the biggest cost of the company’s antitrust battles with the government?

“My own personal view, having been in the middle of it for so long, was the single greatest cost was the distraction,” Smith said. “Having a Bill Gates, a Steve Ballmer, great engineering leaders at our company, spending so much time figuring out how to prepare for a deposition, how to defend themselves on the witness stand, how to implement this, that, or the other thing. You look at the early 2000s. We missed search.”

Big one,” Swisher said.

And it wasn’t the only thing we missed, obviously,” Smith continued.

Mobile phones,” Swisher interjected helpfully, to laughter from the audience.

“I do think one has to have the recognition that nobody’s going to catch everything,” Smith said. “There’s no company here or anywhere else that is going to see every trend before it emerges. But would we have seen these things if we had been spending more of our time looking for them than looking at these specific issues? It’s a great imponderable. It’s a hypothetical. We’ll never know for sure, but I will say the odds of seeing these things would have been higher.”

So where does Smith see Microsoft today?

“I would like to say that we are in the top tier in terms of large companies seeking to innovate at scale, but I also think that we took that weakness, that weakness of just not knowing how to deal with the world, and because we were forced to look it in the eye, over time we developed some strengths there,” he said. “We are trying to navigate the world. I think it’s a huge benefit to have a CEO who grew up on one continent and his lived as adult life on another. We talk everyday about the responsibility that goes with the opportunities that we have in front of us. And I think we work hard to really try to define what those responsibilities mean for us.”

Watch the full video of Smith’s appearance at the Code Conference above, and see more coverage by Recode here.

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