Smith said that the government's UID (Unique Identification) programme was a great initiative and the company stood by the system.
"We have been pursuing work, initially on a pilot basis, to use this specific technology and integrate it with Skype. We see Skype evolving in a way that will enable someone at home to authenticate themselves by using that ID system with a fingerprint or iris scan and then communicate with someone on the other end, maybe even a government agency, which will know that person is the same as he or she is claiming to be," Smith said.
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On his views on governments insisting on setting up local data centres, he said it was a "mistake" as it pushed up the cost of cloud computing. "I think it's a mistake for governments to require data localisation. If every country said that all the data in the country needed to stay in the country, we would quickly see a spiralling cost to cloud computing," he said.
Smith added security of data can be advanced through data classification since only some of the data is sensitive. "I think governments can advance digital transformation and security by developing a classification scheme that guides the different agencies... what it really does is, it protects the most sensitive data and moving other data to the cloud in a way that makes it accessible to the public at large," he said.
Smith also expressed concerns over increasing intervention by governments to access consumer data. Meanwhile, Microsoft said regulations needed to keep pace with rapidly changing technology to secure and protect privacy of individuals. Microsoft, just like its peers Google, Apple and Facebook, has been strongly advocating protecting security of customers and their information.
"Governments have a fundamentally important role in striking a balance between privacy and security. We want to live in a world where the public is safe and where privacy rights are secure. Governments need to strike a balance especially in democratic societies," Smith added.
Smith said laws also need to "catch up" with technology as the latter has moved at a fast pace in the last two to three decades.
"As we look to the future, we believe there is a need for legal modernisation at the national level and perhaps even more, there is a need for a new international legal processes... That's the only way we are going to ensure that law enforcement works effectively and privacy receives all the strong protection it deserves," he said.
Apple recently opposed a US court's ruling to unlock the iPhone of Syed Farook, who shot dead 14 people and injured 22 others in San Bernardino, California, along with another shooter last December.
According to Microsoft the company is working with the government on setting the Cyber Security Engagement Centre (CSEC) under the digital crimes unit of the company. "The centre will work with law enforcement agencies as well as customers and help stakeholders fight cybercrimes," he said.
The company as of now said that is offering its cyber security services to the government, as well as defence forces and power plants in the country and would be expanding the initiative further.