Microsoft CEO Satya Nadella on Monday testified as a witness for the U.S. Department of Justice (DoJ) antitrust case against Google for using its dominance to create a monopoly in the search industry.
The DoJ has accused Google of using anticompetitive practices to maintain its monopoly in the search and search advertising markets.
This involved the company illegally paying $10 billion per year to smartphone makers like Apple and wireless carriers such as AT&T to remain the default search engine on mobile devices and browsers around the world.
The government says Google’s goal was to cut out competition and gain an unfair advantage over its competitors, including Microsoft’s Bing. However, the search giant has denied the allegations.
To help prove its case, the Justice Department called Nadella as a witness in the case to know the efforts made by Microsoft to expand the reach of Edge and Bing, its browser and search engine, respectively, as well as the obstacles faced by the Redmond giant due to Google’s dominance in the browser and search engine fields.
When asked about Google’s agreement with Apple, Nadella labeled it as a “simple oligopolistic arrangement,” which is affecting Bing’s ability to compete in many ways.
“You get up in the morning, you brush your teeth and you search on Google,” Nadella said while speaking about Google’s dominance in the market. “With that level of habit forming, the only way to change is by changing defaults.”
He also told the lawyer representing Google that Microsoft was “competing against someone who has a 97% share” and that the company was, therefore, in a “vicious cycle.”
With Google incorporating its AI software, Bard, into its search engine since March, Nadella says it could strategically use the huge profits it makes from search ad revenues to secure exclusive rights to content that it can use to make its search AI better than rivals, thereby maintaining its monopoly.
The distribution advantage Google has today doesn’t go away, in fact, if anything, I worry a lot that – even in spite of my enthusiasm that there is a new angle with AI – this vicious circle that I’m trapped in could even become even more vicious because the defaults get reinforced.
Microsoft CEO also pointed out that the company has spent around $100 billion to develop its Bing search engine. He also highlighted that since search is the largest software category, the company will continue to invest in Bing despite its low market share, as it believes it can contribute to the internet search industry.
I see search or internet search as the largest software category out there. We are a very, very low share player. But we continue to persist in it because we think of it as a software category we can contribute to. It’s a hard game to make any breakthroughs.
Nadella also spoke about Google’s multibillion-dollar agreement with Apple to make Google the default search engine on iPhone and other devices. He testified that Apple was using its negotiations with Microsoft to “bid up the price” it received from the search giant.
Jonathan Tinter, Vice President of Business Development at Microsoft, who testified at the DoJ’s antitrust trial last week, told the court that the company had failed to secure a deal to put its Bing search app on Apple’s products, even though it was reportedly offering better terms than Google. Ultimately, Apple went on to sign a deal with Google.
Tinter also told the court that even Microsoft’s Surface Duo smartphone was obligated to use Google Search in order to license the Android mobile operating system and was restrained from using Bing on its own devices.