Microsoft CEO Satya Nadella appeared in federal court on Monday as a key witness in the government’s antitrust trial against Google. During his testimony, Nadella underscored Google’s overwhelming dominance in the online search market, painting a picture where Google’s influence shapes how content is tailored for the web.
In his testimony at Washington, D.C.’s District Court, Nadella expressed, “Everybody talks about the open web, but there is really the Google web.” He referred to the way publishers and advertisers often adapt their content to align with Google’s requirements, including optimizing their webpages to conform to Google’s search result rankings.
Nadella’s statements were made in response to questions from lawyers representing the Department of Justice and a coalition of state attorneys general, who are suing Google on the grounds of alleged antitrust violations related to its monopoly in the general search market. The government’s case revolves around Google’s exclusive agreements with browser and phone manufacturers to make its search engine the default choice on various devices. One of the most notable of these deals is the multi-billion-dollar arrangement between Google and Apple, designating Google as the default search engine on Apple products like the iPhone.
The government’s argument asserts that Google’s dominance and its exclusive agreements create a self-reinforcing effect. Greater user exposure leads to improved search results and attracts more advertisers, generating more revenue for funding massive distribution deals. This, in turn, poses significant barriers for competitors attempting to break through to consumers.
Nadella echoed this argument in his testimony, elaborating on the challenges that general search competitors like Microsoft’s Bing face in gaining market share against Google.
Google has not issued a comment regarding Nadella’s testimony.
Nadella also revealed that Microsoft was prepared to accept substantial short-term losses for Bing in order to secure a deal with Apple that would make Bing the default search engine on Apple devices. This would entail not only replacing the revenue Apple receives from Google for default placement (estimated at up to $19 billion annually by some sources) but also covering the risk Apple would take by switching defaults.
Microsoft has been actively pursuing such a deal with Apple, with Nadella stating, “I’ve focused every year of my tenure as CEO to see if Apple would be open” to the idea. He emphasized that Apple faced a similar reputational risk when it initially launched its maps app, which was initially criticized but later gained popularity due to its default status on Apple devices.
The trial continues to unfold, shedding light on the dynamics of the tech industry’s search engine landscape and its impact on competition.
