Alphabet (NASDAQ:GOOGL) Inc.'s search division, Google, is currently under scrutiny in a US antitrust trial. The company is accused of unlawfully maintaining a monopoly by paying $10 billion annually to rivals, smartphone manufacturers, and wireless carriers to ensure its search engine remains the default option on mobile devices and web browsers. The Department of Justice (DOJ) is leading the charge against Google, with Microsoft Corp (NASDAQ:MSFT). CEO Satya Nadella testifying on Monday.
Nadella dismissed Google's assertion that it is easy for users to change default search engine settings on mobile devices. He described the notion of choice in the search market as "bogus," stating that Microsoft's efforts to make Bing the default search engine on iPhones encountered numerous roadblocks.
Last week, Jonathan Tinter, Microsoft's business development executive, testified that despite offering more favorable terms than Google and being willing to incur significant losses, Microsoft failed to secure a deal to make Bing the default search app on Apple (NASDAQ:AAPL)'s products. Instead, Apple renewed its agreement with Google. Tinter also revealed that Microsoft's Surface Duo smartphone was obligated to use Google search as part of its Android mobile operating system license agreement, limiting its ability to use Bing.
Nadella, who played a key role in developing Bing, testified about Microsoft's struggle to break into the online advertising market dominated by Google. Despite Bing gaining some ground on desktop computers through integration with Microsoft's Internet Explorer and later Edge browser, it has struggled on mobile devices where users predominantly use Google. Nadella stated: "It's a hard game to make any breakthroughs, but no one can accuse us of not being persistent."
The US government argues that Google has engaged in illegal payments of $10 billion annually to entities like Apple and wireless service providers such as AT&T (NYSE:T) to secure its position as the default search engine on their devices. Google, which controls approximately 90% of the search market and is valued at over $1 trillion, has denied these allegations. The company maintains that its dominance in the lucrative advertising sector is a result of product quality, not illegal practices.
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