Microsoft Executive Reveals Apple Leveraged Bing as a ‘Bargaining Chip’ for Higher Payments from Google

Apple never had any intention of replacing Google with Microsoft’s Bing as the default search engine in Macs and iPhones. Instead, it used the possibility as a bargaining chip to secure larger payments from Google, according to testimony from a Microsoft executive on Wednesday. Mikhail Parakhin, Microsoft’s chief of advertising and web services, revealed in the US District Court in Washington that Apple makes more money with Bing existing than Bing does. While the statement drew laughter from the courtroom, it shed light on Microsoft’s failed attempts to replace Google on Apple devices over the years.

Industry analysts estimate that Apple receives between $15 billion to $20 billion annually in revenue-sharing payments from Google. In return, Google’s search engine occupies the coveted default slot on Apple’s devices, resulting in revenue generated from users clicking on advertisements in search results. This accusation is a central part of the Justice Department’s antitrust trial against Google, which alleges that the company uses similar agreements to exclude rival search engines and stifle innovation. The trial, which began on September 12, is expected to continue until November.

During questioning, Google’s lawyer, Ken Smurzynski, aimed to undermine the government’s argument that Google’s dominant market position allows it to access substantial amounts of user data, thereby improving search results and widening the gap between competitors. Google’s team countered by highlighting advancements in artificial intelligence (AI) that can enhance search results without relying on user data. Smurzynski presented a document featuring comments from Microsoft CEO Satya Nadella, who mentioned the transformative potential of AI in the search engine industry. Nadella stated in a February blog post that “AI will fundamentally change every software category, starting with the largest category of all – search.”

However, Parakhin compared AI to driverless cars, emphasizing that it is not yet fully ready for prime time. When asked by US District Judge Amit Mehta if a search engine could be built solely on machine learning, Parakhin responded, “We’ve seen companies try. We haven’t seen anybody succeed.”

A ruling from Mehta on the antitrust case is not expected until early next year. If Google is found to have violated the law, a separate trial will determine the appropriate measures to curb its market power. One potential option could be prohibiting the company, based in Mountain View, California, from paying Apple and other entities to make Google the default search engine.