"I feel like sometimes we in tech, even, abdicate control: '[AI] is going to happen tomorrow and our best case is that we're going to be domesticated cats or whatever.' But no, it's a choice. I'm not making fun of that as a consequence. It could happen, but only if we abdicate," Nadella said.
Nadella spoke on Wednesday at The Economic Club of New York, a nonpartisan organization that offers individual membership to top business thinkers. He said it's not enough for CEOs to lament the future of robots keeping humans as house cats — parroting comments by Tesla CEO Elon Musk and former Apple CEO Steve Wozniak.
There are empowering AI tools that help people that are visually impaired, dyslexic and have cerebral palsy, Nadella said.
"But that doesn't mean the unintended consequences of automation — displacement — are not going to be real as well," Nadella said. "So therefore, we as a society — starting with Microsoft — have to do some of our very best work at skilling .... students in school or people who are displaced midcareer."
Nadella said that the most successful companies he partners with don't see technology as something that's just on the sidelines. He said that takes more than just opening an office in Silicon Valley.
"The auto industry has gone through a fundamental transformation," Nadella said. "Computers will look like ancient machines compared to these cars. We have had to show up with that trusted partnership relationship and technology, recognizing that they are going to build technology.... Pick your partners that you can have long-term stable trust, because everyone needs leverage in this world. "
Nadella alluded to recent widespread security issues Spectre and Meltdown as an example of the integration.
"The environment we live in, where the threat vectors are everywhere, one foundational thing we have to do as — I think of us as first responders — is to build products that are more secure," Nadella said. "[But] we have to realize that fundamental security does not just come with building secure products, it's from the operational posture. You can't be fit by just having fitness equipment, you've got to actually exercise."
Since taking over at Microsoft, Nadella has refocused the company on high-growth cloud services like Azure and Office 365, and has made splashy acquisitions, like LinkedIn and Minecraft. In his book, he calls it rediscovering "Microsoft's soul."
But Nadella's recent calls for more empathy in tech come amid tension between Silicon Valley and the rest of the country. Washington-based Microsoft and Amazon, alongside California's Apple, Alphabet and Facebook, have all faced criticism for their apparent dominance.
Culture is a "core enabler of a successful company," allowing Microsoft to invest in innovation and take risks. The challenge he said, was convincing Microsoft's hardcore, analytic engineers to see culture as more than an extension of the founder, or a poster in a conference room.