Microsoft (MSFT - Free Report) is trying to pacify employees about its relationship with the U.S. Immigration and Customs Enforcement (ICE) even as it embarks on a new journey with blockchain and completes strategic acquisitions and deals. Here’s the low-down:
ICE Contract And The Child Separation Policy
The technology sector, by virtue of the talent it has attracted from all over the world, has helped the U.S. lead the world. But that also means it has the largest number of immigrant workers. That’s probably why it has been the one most attacked on immigration issues and the one that has had to take the most defensive stand.
So it isn’t surprising that the government’s zero tolerance policy and the lack of a policy on reunification elicited unsupportive comments from all technology leaders. Microsoft’s case was no different.
The policy itself isn’t anything new: it entails temporary separation of the family while the parents are either prosecuted and/or the identity of the children as belonging to the family is confirmed. But more stringent enforcement is likely what the government was attempting to do when it reportedly separated as many as 2,000 children from those claiming to be their parents. In any case, the President has since signed an executive order forbidding the separation.
Microsoft was charged by its employees on the basis of a blog post from January where it praised the U.S. ICE for “implementing transformative technologies for homeland security and public safety, and adding that “we’re proud to support this work with our mission-critical cloud.”
That blog also said that the ICE would be able to “process data on edge devices or utilize deep learning capabilities to accelerate facial recognition and identification” that “help employees make more informed decisions faster.” This is actually an ideal situation that could minimize the plight of immigrants, but the company has now stepped on the back foot.
Nadella’s letter to employees says, “Our current cloud engagement with ICE is supporting legacy mail, calendar, messaging and document management workloads.” It also says, “I want to be clear: Microsoft is not working with the U.S. government on any projects related to separating children from their families at the border.”
Microsoft has collaborated with consulting firm EY to build a blockchain tool based on the Quorum permissioned distributed ledger (a system that uses a smaller network of nodes to validate transactions thereby saving system resources).
The company claims that the technology can be used by authors, software developers and other creators to collect royalties. If true, it would eliminate a host of middlemen and be greatly beneficial for creators, IP holders and other licensors.
Microsoft intends to start using the technology in its online gaming system and is already working with Ubisoft for implementation. The companies believe that this will enable them to process millions of transactions a day, so payments can be made daily instead of the current 45 days.
“The scale, complexity and volume of digital rights and royalties transactions makes this a perfect application for blockchains. A blockchain can handle the unique nature of each contract between digital rights owners and licensors can be handled in a scalable, efficient manner with an audit trail for the participants,” according to Paul Brody, EY’s Global Innovation Leader for Blockchain.
AI Deal with M&S
Britain’s Marks & Spencer Group has partnered with Microsoft to jump-start the digitization of its operations. The company is particularly interested in Microsoft’s artificial intelligence (AI) solutions that it intends to incorporate in its stores, as well as across its other operations.
Microsoft’s retail prowess came into focus last week with the company announcing its own self-checkout system. Since this too will improve customer experience, M&S may the one of the first to adopt the technology. However, neither company offered details of their collaboration plans.
Marks & Spencer CEO Steve Rowe did however put out a statement that said, “We want to be at the forefront of driving value into the customer experience using the power of technology,” and, “Working together with Microsoft to understand the full potential of how technology and artificial intelligence can improve the in-store experience for our customers and the efficiencies of our wider operations could be a game-changer for M&S — and for retail.”
Acquiring Social Learning Platform Flipgrid
Microsoft has acquired a startup that makes a rather popular app for educators. Called Flipgrid, the app allows people to make videos on any topic for easy sharing with others. The Minneapolis-based startup has less than 30 employees that currently serve 20 million users. Last year, it reported an 800% increase in teacher accounts.
While losing a leadership position to Alphabet’s (GOOGL - Free Report) chromebooks and other classroom tools, Microsoft has always put out products to ensure that it remained in contention. As far as Flipgrid is concerned, the company promises to maintain the brand and allow it to operate across platforms. It is offering the product free for now to anyone who’s willing to use it and schools that already have subscriptions will be refunded on a pro rata basis.
The attraction for Flipgrid is of course Microsoft’s resources that will enable it to scale and better reach students and teachers across the world.
Acquiring AI Startup Bonsai
Microsoft has finally bought the reinforcement learning startup called Bonsai for an undisclosed sum. Last year, it invested in the company through its Microsoft Ventures unit, now called M12. At the time, ABB, Samsung and Siemens also invested in the company to raise $7.6 million, taking its total funding to $13.6 million.
The Berkeley-based startup has 42 employees, all of whom will be moving to Microsoft. The company has previously done some work in the energy, HVAC, robotics and autonomous vehicle sectors. Last year, it developed a new technique for programming industrial control systems that was 45X faster than the competing solution from Google.
Reinforcement learning allows a developer to teach a system through a trial and error process by creating a simulated environment. It therefore allows both AI engineers and those less experienced to get involved in the training process.
Microsoft is betting that AI adoption will be so fast that there will be a skills gap. So the ability to get more people on the job will be a valuable asset.
One-Month Price Performance
Microsoft shares carry a Zacks Rank #3 (Hold). Better tech plays include buy-ranked stocks like Microchip Technology (MCHP - Free Report) , NetApp Inc (NTAP - Free Report) , Akamai (AKAM - Free Report) and Adobe Systems (ADBE - Free Report) . Or, see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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