Decrypt’s Art, Fashion, and Entertainment Hub.
What's good for the goose is good for the gander. More than two decades after being branded a monopoly in the tech industry, Microsoft once again entered the courtroom to testify in another antitrust case. This time, however, the script has flipped, and the Redmond giant is weighing in on fellow tech giant Google's dominance in the search space.
Microsoft CEO Satya Nadella recently testified against Google in a case examining whether the search giant unfairly retains near complete control of online search. “Everybody talks about the open web, but there is really the Google web,” Nadella said, according to a CNBC report.
In fact, he said the Google web could become even more pervasive with the integration of artificial intelligence. Google made a major investment in Anthropic and is adding AI to many of its products.
“I worry a lot that this vicious cycle I’m trapped in can become even more vicious,” Nadella said, explaining that competing with Google could “become even harder in the AI age,” as the search giant has an unmatched archive of web content.
The CEO said it would be “even worse of a nightmare to make progress in search," according to CNBC. "There’s a new avenue to lock up: the thing that basically feeds the power of these LLMs, which is content.”
Even so, Microsoft is also a major player in AI, as it is a major investor in OpenAI—creator of the dominant generative AI tool ChatGPT—and is adding AI to its own suite of business applications as well as to its Bing search engine in an attempt to lure more users.
Microsoft is also bringing its AI-infused Bing to Meta, which is placing its own big bets on AI.
— Satya Nadella (@satyanadella) September 27, 2023
According to Nadella, Google seized the lead and never faltered because it became the go-to search engine across the industry.
"The entire notion that users have a choice is completely bogus," he asserted, saying defaults drive user behavior. “There’s no question users can switch—but they won’t switch because of defaults.”
The Microsoft CEO said his company repeatedly tried enticing Apple to switch Safari's default from Google to Bing, even at great financial cost, but Apple has so far refused.
Nadella described the obstacles facing competitors like Bing in the face of Google's entrenched market power. Despite investing over $100 billion in Bing over decades, Microsoft still only commands single-digit market share, he said. The integration of AI did bring a spike in traffic, but has failed to put a lasting dent in Google's 90% share.
The Department of Justice (DOJ) and Attorneys General from several states have filed a civil antitrust lawsuit against Google for monopolizing digital advertising technologies and breaching the Sherman Act. The lawsuit is part of broader scrutiny of Google's dominance in digital markets.
Additionally, the DOJ accused Google of destroying internal corporate communications amidst the investigations, and there are ongoing probes into other anti-competitive practices, including an investigation into Google Maps.
The Justice Department's lawsuit alleges that through serial acquisitions and anticompetitive auction manipulation, Google subverted competition, impacting both website publishers and advertisers. The DOJ also argues that Google illegally protects its monopoly through exclusive deals such as the one with Apple. This prevents rivals from gaining the scale needed to improve their products, similar to how Microsoft capitalized on its Windows dominance in the 1990s browser wars against Netscape.
In fact, according to an analysis by the New York Times, the government's case against Google relies on legal theories very similar to those used in the Microsoft case 25 years ago. The federal government eventually establishing that Microsoft had repeatedly violated antitrust laws to suppress Netscape and other rival browsers.
It remains to be seen whether this trial can lead to meaningful change in web search and AI-powered features for internet users, given the market's largely static state. As Nadella testified, "It's a hard game to make any breakthroughs."