The internet is really the ‘Google web’, Microsoft boss says in antitrust trial

Satya Nadella, Microsoft’s chief executive, testified on Monday that Google’s power in online search was so ubiquitous that even his company found it difficult to compete on the internet, becoming the government’s highest-profile witness in its landmark antitrust trial against the search giant.

In more than 3 1/2 hours of testimony in federal court in Washington, Nadella was often direct and sometimes combative as he laid out how Microsoft could not overcome Google’s use of multibillion-dollar deals to be the default search engine on smartphones and web browsers.

The internet is really the “Google web,” Nadella told the packed courtroom, adding that Google could now use its advantage and scale to build tools to dominate the emerging artificial intelligence industry.

Microsoft CEO Satya Nadella (left) as he departed from court after giving his testimony against Google.Credit: Bloomberg

The image of the CEO of a leading tech rival — Microsoft is one of the world’s biggest public companies, valued at $US2.4 trillion ($3.8 trillion) — saying it could not easily fight Google was striking.

Nadella’s testimony underscored how entrenched Google has become in online search as the government seeks to prove that the company broke monopoly laws by forging anticompetitive deals to crush rivals.

Nadella’s appearance on the witness stand in the case — US et al. v. Google, which is the first monopoly trial of the modern internet era — was also a sign that the bitter rivalry between Microsoft and Google continues unfettered. Over more than two decades, the two companies have battled over online search, mobile computing, web browsing and cloud computing and duelled in multiple legal battles as both became ever more powerful. Now the companies are locked in an increasingly intense fight over AI.

‘You get up in the morning, you brush your teeth, and you search on Google.’

Microsoft CEO Satya Nadella

“Despite my enthusiasm that there is a new angle with AI, I worry a lot that this vicious cycle that I’m trapped in could get even more vicious,” Nadella said.

Regulators around the world have been working to rein in the power and reach of Google, Apple, Amazon and Meta, which owns Facebook, Instagram and WhatsApp. Last week, the Federal Trade Commission sued Amazon, arguing it broke antitrust laws by squeezing merchants on its site. The FTC has also filed an antitrust lawsuit against Meta, claiming it snuffed out nascent rivals, and the US Justice Department has sued Google in a second case over its control of online advertising.

The 10-week Google trial is being closely watched as a referendum on whether the government can slow down Silicon Valley’s biggest companies. A Google victory could be a major rebuke of regulators who say the tech giants have too much sway over their customers, partners and startup competitors.

At the heart of the government’s case is the contention that Google illegally cemented its monopoly in online search by paying to be the default search engine on browsers such as Apple’s Safari and Mozilla’s Firefox, as well as on the home screen of smartphones. Google has argued that the default positions are not overwhelmingly powerful and that users can switch to a new search engine if they like.

But in court, Nadella said that argument was “bogus” because users generally don’t change their default search engine, even if they can do so.

“You get up in the morning, you brush your teeth, and you search on Google,” he said, later adding that the arrangement between Google and Apple in particular was “oligopolistic.”

Nadella said Microsoft had tried to win deals for the default positions on browsers and smartphones for Bing, its own search engine. But it had not been very successful, he said.

Microsoft introduced Bing to compete against Google in 2009. At the time, Microsoft began an aggressive public relations campaign against Google and both companies lobbied against the other with regulators in Europe and the United States.

In 2016, the public mudslinging seemed to come to an end with Nadella and Google CEO Sundar Pichai, who were both new to their roles, declaring a détente. The rivalry had become a distraction, they said, and they had different priorities.

The testimony from Nadella showed their rivalry had continued. John Schmidtlein, Google’s lead litigator, said in his opening statement that the case was “really all about Microsoft.”

Last week, other Microsoft executives such as Jonathan Tinter, a business development executive, and Mikhail Parakhin, an advertising executive, testified about the search business. Tinter said Google used its scale to make its search engine the default on Apple and Samsung phones, stifling competitors such as Microsoft.

On Monday, Schmidtlein sought to undermine Nadella’s testimony by suggesting that Microsoft’s failure to compete with Google was the result of an inferior product and a lack of investment.

Schmidtlein hammered Nadella with questions about instances in which Bing had been the default on mobile phones only for users to switch back to Google. He noted that Nadella had referred to Google as “dominant,” and asked him if he could substitute for the word “popular.”

Nadella said that whether you “call it popular or dominant,” Microsoft was still competing against Google’s massive market share.

“This testimony paints Google as a bully that everyone’s afraid of,” said Rebecca Haw Allensworth, a professor at Vanderbilt Law School, adding that it suggested that Google’s motivation for signing exclusive search deals was not “merely sharing revenue for a valuable product with a distributor like Apple, but it is primarily to keep competitors like Bing at bay.“

While much of the trial has revolved around Google’s past behaviour, Nadella shifted some of the focus to the future and AI. Microsoft has invested $US13 billion in OpenAI, the maker of the ChatGPT chatbot, which can now use Bing as a search default. Google has begun offering its own AI-powered chatbot, Bard.

Nadella said he was worried that Google would strike deals to exclusively use content online to train its AI tools.

“When I am meeting with publishers now, they are saying, ‘Google’s going to write this cheque to us, and it’s going to be exclusive, and you have to match it,’” he said.

Nadella said that would prime Google to dominate the next generation of online search, too.

“My main worry now, other than my early exuberance about an opportunity that we may have here, is: Is this going to be even more of a nightmare to make progress in search?” he said.

At the end of Nadella’s appearance, a US Justice Department lawyer asked why he thought Google paid Apple so much money to be the default search engine on Apple’s web browser Safari.

“That’s a great question,” Nadella said. “I would love an opportunity to sort of not have them pay — maybe on behalf of the Google shareholders.”

This article originally appeared in The New York Times.

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