“The entire notion that users have choice, and they go from one website to another website…is completely bogus,” Nadella said. “Defaults is the only thing that matters in changing search behavior.”
Nadella said Microsoft had been willing to pay “north of 10 plus billion a year” to companies like Apple to prioritize Microsoft’s Bing search engine, but that they were unable to sway Apple away from its longstanding contract with Google.
The Justice Department’s antitrust case against Google revolves around deals the company struck requiring makers of smartphones to use Google’s search engine.
Google has argued that those companies were free to strike deals with a different search engine but chose Google because its service is best. Google also in contending that artificial intelligence technologies like ChatGPT have injected new competition into the search market.
Microsoft’s Bing search engine has long been a distant rival of Google search, which dominates 90 percent of general search queries. The Justice Department is arguing that Google used anti-competitive practices to prevent rival search engines like Bing from having a chance.
Under questioning by Justice Department attorney Adam Severt, Nadella said that search was the largest software category “by far,” which is why Microsoft has persisted despite its low market share. Nadella said they have been hanging on in case something changes in the search landscape, giving them a better chance.
Before Nadella succeeded Steve Ballmer as Microsoft’s CEO in 2014, he had headed Microsoft’s efforts starting in 2007 to build a rival search engine to Google’s. The result was the Bing search engine, launched in 2009.
Early this year, Nadella declared that “a new race” was on against Google, after Microsoft launched an updated version of Bing powered by ChatGPT’s AI capabilities. Despite an initial flurry of interest, Bing has so far peeled off only a limited numbers of users away from Google.
Nadella said on the stand that Google has “carrots and massive sticks” to get smartphone makers to stay in default contracts with its search engine, including the threat of not letting Android phone makers use its Google Play app store.
“Without Google Play, an Android phone is a brick,” he said. “That’s the kind of stuff that’s impossible to overcome.”
Microsoft has been in Google’s shoes before. The last time the Justice Department launched an antitrust case against a tech company, it was against Microsoft in 1998, and for similar practices. Microsoft was accused of illegally maintaining a monopoly by requiring PC makers to use its Internet Explorer browser and other applications as a requirement of running its Windows operating system. The case was settled, with Microsoft making pledges to improve competition.
The trial has kicked off with the Justice Department calling its witnesses, including Nadella, and making its case. Google will get the chance to lay out its defense and call its own witnesses starting late October.
