Microsoft CEO Satya Nadella has dismissed Google’s argument that it is easy to change defaults on computers and smartphones as “bogus” during his testimony in a landmark antitrust trial against Google’s parent company, Alphabet.
According to Reuters, Nadella revealed that Microsoft had attempted to make its Bing search engine the default on Apple smartphones but was rejected. Google’s lead lawyer, John Schmidtlein, questioned Nadella about instances where Microsoft won default status but users still opted for Google. Schmidtlein argued that Microsoft’s strategic errors, such as a failure to invest in Bing’s improvement and a failure to recognize the mobile revolution, led to Bing’s inability to gain traction. Despite being the default search engine on most laptops, Bing’s market share remains below 20%.
The U.S. Department of Justice has brought this major antitrust case against Google, alleging that the company illegally paid smartphone makers and wireless carriers, including Apple and AT&T, around $10 billion annually to be the default search engine on their devices. Google’s dominance in search gives it significant influence in the lucrative advertising market, boosting its profits. Nadella acknowledged that changing defaults is easiest on Windows but toughest on mobile devices, highlighting Google’s dominance in search, reported Reuters.
During the trial, Judge Amit Mehta questioned Nadella about why Apple would switch to Bing when it offers lower quality compared to Google. This suggests that the judge is interested in Google’s argument that its dominance is due to quality rather than illegal activity. Nadella responded by stating that Microsoft aimed to bridge the quality gap by leveraging the number of queries made on Apple smartphones to improve Bing’s performance.
Nadella also testified about the competition between tech giants in the artificial intelligence (AI) market. He compared the efforts of tech giants to build vast content libraries for training their language models to early phases of distribution deals, per Reuters. Nadella mentioned that publishers often inform him about exclusive deals with Google, which Microsoft is expected to match. Microsoft has heavily invested in OpenAI, while Google has made investments in AI, including the development of the Bard AI chatbot.
This antitrust trial comes years after Microsoft faced its own federal antitrust lawsuit, which ultimately led to the company ending certain business practices and paved the way for competitors like Google. Despite Microsoft’s market capitalization of about $2.3 trillion, surpassing Google’s parent company, Alphabet, with a market capitalization of about $1.7 trillion, the two tech giants have been bitter rivals since Google’s emergence as a leading search engine in 1998. They compete in various areas, including browsers, search engines, email services, and now, artificial intelligence.