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Will Microsoft dock Satya Nadella’s pay again this year? The software giant faced the latest in a seemingly endless string of security breaches over the weekend, when it told customers that hackers were exploiting a flaw in its SharePoint file-sharing software. According to a statement by cybersecurity firm Palo Alto Networks, the fact that SharePoint is integrated with Microsoft’s other services, such as Office, Teams and Outlook, makes the hack “especially concerning” (more here).
Major security hacks have become a constant sore point for Microsoft. Last year, the company suffered a breach by Russian hackers that affected its government customers, and the year before, a Chinese hack compromised the email accounts of top U.S. government officials. That led to a federal investigation, which blamed the incidents on “a cascade of Microsoft’s avoidable errors.” The company’s president, Brad Smith, later told Congress Microsoft would tie one-third of the performance bonuses for its 14 highest-paid executives to improving cybersecurity. The company cut CEO Satya Nadella’s cash incentive pay—essentially his bonus—by half to $5.2 million for fiscal 2024 to demonstrate “his personal accountability” for quickly fixing the cybersecurity problems, Microsoft said. (His total compensation was $79 million, mostly from stock awards, so Nadella likely didn’t have to cancel a vacation or anything as a result of the reduction.)
The persistent problems might reflect internal culture challenges. We reported in 2022 that Charlie Bell, recruited in 2021 from Amazon to oversee cybersecurity, encountered resistance when he tried to get “his teams to be more vigilant about preventing and responding to software vulnerabilities.” Bell is still at Microsoft, and he may have overcome those issues by now—but that seems unlikely, given the major hacks that have occurred since then.
To be fair, though, even if Microsoft’s team was as aggressive as humanly possible, its sheer dominance in enterprise software would mean hacks would be inevitable. Hackers don’t go after software that isn’t widely used—what would be the point? They want to have maximum effect, which means targeting the software that is most widespread. Microsoft is, in a sense, the victim of its own success. Still, the company needs to reduce the frequency of these major hacks, if not eliminate them entirely.
Companies Tighten IT Screws
Uh-oh. Companies appear to be retreating in their plans for tech spending. That’s according to S&P Global Market Intelligence, which reported that sentiment about “spending intent” had dipped meaningfully in the second quarter after three consecutive quarters of improving sentiment. And S&P predicts a further drop-off in the third quarter.
What spending businesses are doing will be focused on security, first and foremost (phew), as well as cloud computing and artificial intelligence. Anything else seems likely to be an even lower priority than it already is. That’s not great news for enterprise software that isn’t AI driven, or even for hardware makers. The reason, S&P says, is uncertainty sparked by the constantly changing trade policy of Donald Trump’s administration. What a surprise.
In Other News
• Design software firm Figma set a tentative pricing range for its IPO of between $25 and $28 a share, or between $14.6 billion and $16.4 billion.
• CoreWeave said Monday it would raise $1.5 billion in debt, two months after it raised $2 billion to help refinance existing debt.
• Crypto custody firm BitGo said on Monday it has confidentially filed for an IPO. It’s the latest crypto company rushing to go public as investors embrace digital asset–focused companies.
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