Microsoft once contemplated taking a substantial loss on a deal in order to oust Google as the default search engine on Apple’s web browser, revealed a Microsoft executive during the ongoing Google antitrust trial on Thursday.
The federal government claims that Google has established an unlawful monopoly by paying partner companies like Apple and AT&T over $10 billion annually to keep their search engine as the default option, preventing competitors like Microsoft from gaining traction.
In 2016, Microsoft engaged in internal discussions about potentially investing in an Apple deal that would have resulted in a multi-billion-dollar loss for the company, with the primary aim of eroding Google’s market share, as stated by Jon Tinter, a vice president of Microsoft business development.
According to Bloomberg, Tinter said, “In the short term, it would have been highly negative. We informed the board that we were considering making a multi-billion negative investment to support this.”
The discussions had progressed to the point where Microsoft CEO Satya Nadella even met with Apple CEO Tim Cook, although the deal ultimately never materialized. The agreement would have required Microsoft to share ad revenue from user searches with Apple.
Default search engine agreements have emerged as a central point of contention in the antitrust trial, which is the largest of its kind in two decades. Google currently dominates the online search market, commanding around 90% of the market share.
Tinter mentioned that Microsoft has encountered difficulties in securing similar deals to make Bing the default option, despite offering potential partners 100% or more of ad revenue as part of the agreements.
Tinter stated, “We were just big enough to play but not big enough to win.”
Google’s legal team has denied accusations of anticompetitive behavior, arguing that consumers choose their search engine because it is the best product in the market.
Tinter’s testimony followed statements made by another Microsoft executive, Mikhail Parakhin, the head of advertising and web services at the company.
Parakhin suggested in court that Apple entertained negotiations with Microsoft as a bargaining chip to secure a better default deal with Google, although it had not seriously considered switching search engines.
Parakhin’s remark, “It is no secret that Apple is making more money on Bing existing than Bing does,” elicited laughter in the courtroom.
Eddy Cue, a top Apple executive and a confidant of Tim Cook, defended the company’s search engine deals with Google, stating that there “certainly wasn’t a valid alternative.”
Google obtained default search engine status on Apple’s Safari browser in 2002 and recently renewed the partnership in 2021.
Estimates by wealth management firm Bernstein, cited by CNBC, suggest that Google may be paying up to $19 billion per year to secure default status on Apple devices.
The high-profile antitrust trial has faced criticism for its lack of public transparency and secrecy surrounding the proceedings.
Due to concerns over sensitive internal company information, the testimony of several witnesses, including a significant portion of Eddy Cue’s appearance, was held in closed court sessions.
Earlier this week, Judge Amit Mehta ruled that federal attorneys could resume posting trial exhibits on a public website after initially blocking them in response to complaints by Google.
Judge Mehta defended his handling of the situation by stating that the Department of Justice should voice any objections if particular evidence or testimony is of public interest.
With Post wires
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