Microsoft and the Pentagon Billions

Microsoft is expected to present profitable quarterly results again on Tuesday evening. The software giant is also increasingly benefiting from the proceeds from a partnership with the US military.

After the US market closes this evening, Microsoft will report a significant increase in profits and a further increase in sales, analysts and investors are certain of that. The company is one of the most important beneficiaries of global digitization. The Microsoft share has risen to new record highs in the run-up to the presentation of the figures in view of further expected billion-dollar profits.

Headsets and cloud services

The outlook that the company will give in the evening should also show that its business success is increasingly linked to the US military. In early April, Microsoft announced that the US Department of Defense had ordered headsets and cloud services for up to $ 21.9 billion. The delivery contract, which runs for ten years, includes 120,000 virtual reality data glasses that Microsoft develops and sells under the name Hololens. Soldiers should not only have access to common services such as night vision and thermal imaging functions via the headsets, but also important data to facilitate tactical and strategic decisions with the help of augmented reality. The contract also includes Microsoft’s cloud services, which the company, as one of the market leaders, also offers to many private companies. When the US Department of Defense received its first cloud contract around two years ago, Microsoft outperformed its big rival in the cloud business, Amazon. This business is about the outsourcing of data and software services by companies to the data centers of providers such as Microsoft. In the “Intelligent Cloud” division, the company had more than a third of its total revenues last year (48 billion dollars). The growth here was almost twice as great as in the classic company areas in which, for example, the Windows operating system or the hardware and software of the “XBox” game console are marketed.

Employees protest

Microsoft’s increasing proximity to the Pentagon as a major customer had already caused some of the company’s employees to protest in 2019. With the development of a prototype of the Hololens, a limit has been exceeded, according to employees who reported under the slogan “Microsoft Workers 4 Good” on the Twitter short message service. Microsoft has never crossed the line to produce weapons before, and the data glasses enable soldiers to kill people in a targeted manner. At the beginning of April, the Pentagon’s new, even larger order also faced fierce headwinds: The critics from the workforce recommend Microsoft to deal with gender equality in the company rather than with the sale of war weapons. Microsoft boss Satya Nadella had already dealt with the concerns during the first negotiations with the Pentagon at the end of 2018. In a letter to the employees, he stated that Microsoft had been supplying the military with its services and software solutions for four decades. In addition, one stands by a “strong defense” of the USA by the US troops. “When it comes to the military as a company,” said Nadella, “Microsoft will get involved.”

Google got out of “Maven” project

The software company is not the only major corporation from Silicon Valley that has been criticized by employees and observers for deliveries to the Pentagon. In 2018 there was a storm of protest at the Google parent company Alphabet because Google provided algorithms in the “Maven” project with which US drones should fly more efficient attacks. Google then discontinued its participation in 2019. At Microsoft, deliveries for the US Department of Defense are also about its image as an ecologically but also ethically “clean” company. When it comes to environmental protection, the software giant is considered exemplary. By 2025, the carbon footprint should be completely “green”; Microsoft already only uses electricity from renewable energies. By the middle of the century, all of the CO2 that the company has emitted since it was founded in 1975 is to be removed from the atmosphere. But as far as the ethical standards are concerned, rating agencies that have specialized in sustainability criteria could soon take a closer look at an increasing integration of the company with the military and perhaps also adjust their rating.