Quiver Quantitative - Microsoft (NASDAQ:MSFT) CEO, Satya Nadella, voiced concerns in a recent testimony at the Google (NASDAQ:GOOGL) antitrust trial, cautioning that Google's dominance in search could extend to future AI-driven platforms. Nadella expressed that Google's (GOOG) vast profits from search ad revenues could be strategically used to secure exclusive rights to content, enhancing its new AI-powered search offerings. This stance marks a departure from his earlier statements, where he had touted the advantages of Microsoft's Bing over Google, especially after the introduction of its AI-based search capabilities.
The Department of Justice (DOJ) is challenging Google's continued stronghold, alleging the company unlawfully preserves its monopoly by paying out around $10 billion annually to rivals and manufacturers to remain the default search option across devices and browsers. Testimonies from Nadella and other Microsoft executives will support DOJ's argument, demonstrating the challenges even behemoths like Microsoft face in counteracting Google's dominance in the search market. Microsoft's previous efforts, like its $100 billion investment in Bing and partnerships with Verizon (NYSE:VZ), BlackBerry (TSX:BB), and Nokia (HE:NOKIA) (NOK), were insufficient in making significant market headway against Google's 97% share.
On the legal front, Google intends to argue the inferior quality of Bing as the primary reason for its lagging performance. They highlight how Microsoft, back in 2007, had a considerably smaller pool of search engineers and was years behind in offering a competitive product. Notably, despite Microsoft's willingness to provide more lucrative terms than Google, they were unable to secure a deal for Bing's integration on Apple (NASDAQ:AAPL) devices, further cementing Google's supremacy.
Additional testimonies illuminated some of the underpinnings of the tech giants' strategic maneuvers. Jonathan Tinter from Microsoft shared how the company's Surface Duo smartphone was obligated to use Google search due to Android OS licensing stipulations, limiting Bing's presence. Discussions also revealed Microsoft's challenges in advertising, with Google's Search Ads 360 software reportedly disadvantaging Bing. Despite these challenges, Microsoft has made strides in desktop search share but remains significantly behind in the mobile domain.
This article was originally published on Quiver Quantitative