Microsoft CEO Claims Google's Dominance is Due to Deals with Apple

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Microsoft CEO Satya Nadella has recently argued in a D.C. courtroom that Google’s dominance in search engines can largely be attributed to strategic deals that have ensured it is the default search engine across smartphones and computers. This testimony was given as part of an ongoing antitrust trial that could considerably shift the balance of power between Google and other Silicon Valley giants.

The battle between technology giants intensifies as Microsoft’s CEO points fingers at Google’s search engine dominance.

Google's Default Search Engine Deals

Nadella's argument centered on the notion that virtually every smartphone sold in the United States comes pre-installed with Google Search as the default engine. According to estimates by equity firm Sanford Bernstein, Google is expected to pay Apple between $18 billion to $19 billion this year to maintain its default status on iPhones and other Apple products.

In Nadella's view, Microsoft could not compete with this arrangement. He stated that, despite Microsoft's willingness to pay over $10 billion a year to convince companies to prioritize Bing, Google's longstanding contract with Apple made this impossible.

“The notion that users have a choice, and they go from one website to another website … is completely bogus,” Nadella said. “Defaults are the only thing that matters in changing search behavior.”

Google's Counter-Argument

Google has countered these allegations by stating that companies were free to strike deals with different search engines, but they chose Google due to its superior service. Additionally, Google contends that introducing artificial intelligence technologies, such as ChatGPT, has created new competition in the search market.

Microsoft's Position and Potential Benefits

Microsoft stands to gain significantly if Google is penalized in the trial. Microsoft’s Bing search engine has long been a distant rival of Google search, boasting 90 percent dominance in general search queries. The Justice Department argues that Google used anti-competitive practices to prevent rival search engines like Bing from gaining traction.

Nadella stated that search is the largest software category “by far,” which is why Microsoft has persisted despite its low market share. He expressed optimism that something could change in the search landscape, giving Microsoft a better chance of competition.

Microsoft's Bing and the Future

Before Nadella was appointed Microsoft’s CEO in 2014, he spearheaded Microsoft’s efforts starting in 2007 to build a rival search engine to Google’s. This resulted in the launch of Bing in 2009.

Earlier this year, Nadella declared a “new race” against Google after Microsoft unveiled an updated version of Bing-powered by ChatGPT’s AI capabilities. Despite some initial interest, Bing has only managed to convert a limited number of users away from Google.

Nadella highlighted Google's significant influence over smartphone makers to maintain its default contracts, including threatening Android phone makers by removing Google Play app store access.

The Trial Continues

The antitrust trial continues with the Justice Department calling its witnesses and making its case. Google will get to present its defense and reach its witnesses starting in late October. The result of this trial could significantly impact the tech industry and alter the dominance of Google's search engine.