Microsoft CEO Satya Nadella’s comments during the antitrust trial against Google have sparked a row between the two companies. During the cross questioning of Nadella, he said that he would call Google’s search dominant not popular.
The Microsoft CEO argued that Google’s practices made it harder for the rivals to make a space in the search engine market. Microsoft has its own search engine called Bing. The company launched it in 2009 but a look at the market share of the search engine shows why its CEO has his fair share of complaints against Google. Statcounter data showed that Google holds nearly 92 per cent market share while Bing has just over 3 per cent.
Nadella, being a star witness in the DoJ case, has brought the attention to the rivalry between the two tech giants and the ambitions of Microsoft to become a major player in the search market. What makes the testimony interesting is that Microsoft itself was on trial for a similar case 30 years back, the result of which helped create an open ecosystem for Google in the early 2000s.
Satya Nadella Sparks Row
The heart of the DoJ case against Google relies on the arrangement of the tech giant with device makers to have its search engine as its default option. According to the lawsuit, the company paid around $10 billion to Apple, Samsung and other device makers yearly for the arrangement.
According to Nadella, Google’ s deal to have its search engine as default is crucial for its dominance. He dismissed the argument that everything is a click away and said that all the major platforms try to achieve the default status because of its power. In his testimony, he cited the example of Apple Maps. He argued that the company made the maps app iOS default option but it faced problems because of quality issues. However, the company was able to sustain the user base because of the default option and eventually most of the Apple users started to use the app.
As reported by journalist Jason Kint, Nadella said in the court that companies offer carrots (like financial rewards) for the default option. However, he said that Google has also used sticks. He said that company can use its mobile applications distribution agreement (MADA) to coerce device makers. Without MADA, devices won’t have access to the Android apps.
The Verge reported Nadella as saying, “I see search as the largest software category out there by far, .. I used to think of Windows and Office as attractive businesses until I saw search." The CEO added that if Apple had agreed to make Bing its default browser, the company would have been able to establish its presence in the market and also get vital user data to improve its search engine which in turn would have prompted the advertisers to spend on Bing.
By having exclusive arrangements with device manufacturers, Google has made it difficult for other rivals to prop up in the market, Nadella said.
Google's lawyer argued that Microsoft had made several strategic errors due to which Bing was not able to succeed. The lawyer said that Microsoft’s failure to invest in improving servers and engineers was one of the reasons for its inability to gain foothold in the search engine market.
Google also said that Microsoft was able to have exclusive deals to be the default engine on Blackberry and Nokia in 2011 but they did not work out and users ultimately opted for Google.
The complaint against Google’s position in the market not allowing proper competition is not the first one by a competitor.
In an interview to npr, DuckDuckGo Vice President of Public Affairs Kamyl Bazbaz had said, "Google has used its monopoly power to block meaningful competition in the search market by putting a stranglehold on major distribution points for more than a decade."
Not only in United States, the company has faced complaints in several countries which include South Korea and Russia. In 2011, two of the biggest search engines in South Korea had filed a complaint against Google for allegedly blocking their installation of devices. Russian search engine platform Yandex also complained against Google for dominating market by being the default option on devices.
“We believe that device manufacturers should have a choice as to which search provider to set as the default or which services to have preinstalled on the device. Google should not prevent manufacturers from preinstalling competitor apps,” Yandex spokesperson Ochir Mandzhikov was quoted as saying at the time by TechCrunch.
Google had lost the case and the Russian authorities had asked the company to amend its contracts with original equipment manufacturers (OEMs) to comply with the ruling.
The last time a tech giant faced a lawsuit over deals for exclusivity with device manufacturers, it had led to a ruling in favor of the US government. Whether the current lawsuit succeeds in ending the dominance of Google in the search engine market will become clear in the coming months.