Tech giant Microsoft $MSFT Corp. wants the US Department of Justice (DoJ) to penalize Alphabet $GOOGL’s Google for stifling competition in the internet search market. Speaking on Monday (Oct. 2) during Google’s antitrust trial in Washington, Microsoft CEO Satya Nadella said the assumption that users have a choice to change search engine defaults is “bogus”.
The DoJ and the attorneys-general of 38 US states have accused Google of engaging in monopolistic business practices to hold onto its huge search traffic. They allege that the company pays at least $10 billion every year to smartphone manufacturers, rival web browser makers, and mobile network operators to make its search engine the default option. Alphabet has denied any wrongdoing, but Nadella said Google’s 91.6% global market dominance makes it “a hard game to make any breakthroughs.”
In its defense, Google argues that it’s made it easier for users to change search engine defaults on smartphones and PCs. In April, Google attorney John Schmidtlein told the DoJ that “offering a superior product, winning business on the merits is never unlawful.”
But Nadella refutes such arguments, noting that Microsoft’s attempts to make its Bing search engine the default on all Apple $AAPL devices have been frustrated. Bing controls just 3% of the world’s search engine traffic.
Microsoft is disappointed that a planned deal with Apple fell through earlier this year, despite offering better terms than Google and accepting that it would lose billions of dollars to make Bing the default. This February, Apple signed a fresh $15 billion deal with Google that could rise to $19 billion by the end of the year. In 2020, an agreement to sell Bing to Apple also failed to materialize.
End of truce, resumption of war
Since 2021, Google and Microsoft have been locked in a market battle after ending their five-year non-aggression pact, which saw them agree not to direct their influential lobbying firepower against each other’s businesses. Since then, Microsoft’s concerns have revolved around advocating for equity in access to search engines, while Google views those efforts as a reflection of Microsoft’s perception of Google as a threat to its products. In March, Google accused Microsoft of anti–cloud computing practices, criticizing it for making deals with several European cloud service providers, against its licensing terms.
The intense rivalry between the two giants has attracted broad regulatory scrutiny from antitrust agencies. This attention is expected to take a new shape when judge Amit Mehta of the US District Court for the District of Columbia finally decides on the current case next year.
While Microsoft would be happy to see Google penalized in the trial, its $10 billion investment in OpenAI’s ChatGPT and the integration of that chatbot with Bing will do little to dislodge Google from its place as the world’s most preferred search option.