Microsoft CEO Satya Nadella attends Google antitrust trial,It tells the story of how Microsoft's Bing search engine has been suppressed by Google for more than ten years, and also reveals a lot about the current situation of NewBing, which was launched more than half a year ago.
On February 7, 2023, after Microsoft announced that the new version of Edge browser and search engine Bing would integrate ChatGPT, a sleeping dream awakened-the search dream of Microsoft Bing. At that time, data from a third-party agency, data.ai, showed that global downloads of the Bing app increased 10 times overnight. In the interview, Nadella expressed confidence that AI may change the search engine market and help Microsoft Bing increase its market share.
But on October 2, when Nadella testified in the Google antitrust case, he stated that he was "a person with about 3% of the search share" at the time, and began to think "maybe I will have a 3.5% share." However, data shows that since adding artificial intelligence capabilities to Bing, Microsoft's share of the search market has barely changed.
On October 6, the largest antitrust case since the U.S. government sued Microsoft in the 1990s entered its fourth week. Nadella's presence pushed this century trial concerning the fate of Google to a climax.
01AI can’t steal it eithersearch share
According to foreign media reports, Nadella supported the arguments of the U.S. Department of Justice during the trial.That is, "Google has used unfair tactics" (most importantly, the default search contract) to prevent competition from search rivals such as Bing.A Microsoft spokesperson provided the media with a partial transcript of Nadella's testimony, which includes about an hour of Nadella's questioning testimony to Justice Department lawyer Adam Severt.
Nadella said that in Silicon Valley, "Internet search is the biggest no-fly zone."Because Google controls mobile phone manufacturers and browser default search locations, users have no real choice of search engines.
Nadella said that even if Microsoft appears to be leading in artificial intelligence - it has invested billions in OpenAI - it may not be enough to change that, because artificial intelligence will only be able to reshape today's search market.
But that’s not what Nadella said six months ago. During Microsoft's launch of the new Bing in February this year, Nadella said that artificial intelligence-driven Bing may bring Microsoft a turning point in competing with Google. But during the trial, Nadella attributed his enthusiasm at that time to "people who had about 3% of search shares" and began to think, "Maybe I will have 3.5%." According to the Wall Street Journal, as of August, even this small goal had not been achieved, and Microsoft's share of the search market has barely changed since adding artificial intelligence capabilities to Bing.
Nadella believes that AI can bring about tomorrow in the search field, but it is still under the shadow of "default Google" and has not seen the light of day. Google's chief trial lawyer, John Schmidtling, argued during the trial that this was due to Microsoft's competitive mistakes rather than Google's control of the market.
Nadella disputed this: "You get up in the morning, brush your teeth, and then search on Google. The only way to change your habits is to change the default settings." He told the court that even ChatGPT cannot surpass Google in the search market because for most users, Google is the most accessible and obvious choice.
Nadella even believes that,AINot only may the technology fail to provide opportunities for Google's competitors such as Bing, it may even solidify Google's dominance in search.Nadella said that the distribution advantage that Google has in the AI era has not disappeared. "In fact, I am very worried that - although I am passionate about artificial intelligence - this advantage will fall into a vicious circle with the addition of artificial intelligence, because the default value has been strengthened. This will be a worse nightmare for the search field."
Nadella's testimony was intended to show that Google's dominance in the market is so insurmountable that a company as big as Microsoft cannot compete even though it may invest more than Google.
But Microsoft will keep trying. Nadella said that Internet search is the largest software category. "We are a very, very small player. Search is a difficult game to make any breakthroughs. We continue to persist because we can contribute, and no one can accuse us of not persisting."
02Microsoft’s “Grab Apple” War
In the current world of the two major systems at the entrance to the Internet - Android and Apple, it is obvious that Google has absolute control over the choice of the default search engine for Android system browsers.
As Nadella said in court, no matter how much money he is willing to pay to attract Android manufacturers to leave Google, he will not succeed because:“Google has carrots and sticks, and the stick is deletionGooglePlayThreaten Android mobile phone manufacturers, without Google Play,AndroidA cell phone is a brick. "
Because it is different from the domestic Android mobile phone ecosystem, in overseas markets, Google Play is the most important application distribution platform in the Android ecosystem. The lack of Google Play will indeed greatly affect the user experience of Android mobile phones and affect consumers' purchasing decisions.
So Nadella has been committed to "grabbing Apple", Apple's default settingIt’s tooIt's important.Nadella said that Apple Maps is the best example to demonstrate the power of default settings. The popularity of Apple Maps is largely due to its default settings on Apple devices. No matter what default tools Apple sets on its operating systems and systems, the latter will basically become the "king" of Apple phones.
However, Google Maps is still popular on Apple devices. According to MacRumors, despite all the recent praise for the Apple Maps overhaul, what hasn't changed is that "even though Apple Maps comes pre-installed on all iPhones, the vast majority of iPhones in the United States download Google Maps as an alternative."
Although the default settings did not allow Apple to completely defeat Google Maps, this was the last straw for Microsoft. Nadella told the court that he would see if Apple would make Bing the default search engine every year because of Google's apparent lock-in of the search engine on Android devices and its popular Chrome browser. He said Microsoft was willing to accept years of losses just to make this deal and break new ground in the search competition.
But no matter how hard it worked and how much money it spent, Microsoft's wish was never realized. Testimony from Microsoft business development chief Jonathan Tinter said that even though Microsoft offered Apple better terms than Google and was willing to lose billions of dollars to ensure default search rankings on Apple devices, Apple still chose Google. Because Apple's default search deal with Google seemed so lucrative that it had no interest in working with Bing.
Tinter said Nadella met with Apple CEO Tim Cook in 2016. Tinter said that if the proposed agreement was reached at that time, although Microsoft might suffer billions of dollars in losses on the terms of the deal, the deal would be beneficial to Bing and ultimately allow Bing to gain more market share and revenue.
Earlier, Apple and Microsoft reached a cooperation to use Bing in Siri and Spotlight. At the same time, Microsoft also hopes to extend the cooperation to the Safari browser.But in the end, Microsoft not only failed to win the Safari browser, but also lost Siri and Spotligh. Googlestrengthened oneselfappleThe location of the mobile phone’s default search engine.
Since the advertising fees earned from the cooperation between the search engine and Apple have to be paid to Apple, Tinter said that because Bing is much smaller than Google, Microsoft will have to provide Apple with a larger proportion of revenue than Google, and at least at the beginning of the cooperation, Microsoft will suffer losses. He said that because the agreement Microsoft planned to sign with Apple was very unfavorable to the company, the company's executives had discussed with the board of directors how to explain it to shareholders.
Among the evidence at the trial was an email sent by Tinte to Nadella on December 15, 2019. He suggested that Microsoft and Samsung change their way of discussing the issue of browser default search engines and stop current communication. Because "the company does not want to make major changes, even if cooperation with Microsoft can allow Samsung Electronics to obtain more economic returns, the company will not leave Google."
Tinter also said he had been urging Samsung Electronics executives for years to at least allow Microsoft to bid on its default search engine for its phones, citing the example of Apple. He said: "Although we did not win the Apple contract, we helped Apple make more money and made Google pay more." But Samsung Electronics executives said, "Jon, it's just not worth it. We don't want to go down this path."
Tinter said that even if it would provide 100% or more of the ad revenue to potential partners, "we would only be big enough to bid ourselves, not win the contracts."
Microsoft's position on returning to the search market has always been, "at least let me in."“It’s not just us, there are other competitors that will have a more even share of search, get traffic from multiple channels, and advertisers will get better pricing,” Nadella said in an interview after the launch of the new Bing in February. “Think about what a great future this will be.”
03Can AI still work?
Reinventing search engines
This Google antitrust case is the largest and most influential antitrust lawsuit since the U.S. government sued Microsoft in the 1990s. Whether Google has a monopoly in this case will be decided by Judge Mehta alone. In addition to Microsoft's situation, the judge was also concerned about whether innovation in the current search market is still effective in the market. Mehta asked Nadella, "Can a startup use the innovative technology of artificial intelligence to seize market share from Google?"
Nadella told the judge that this is very difficult for startups. Microsoft's investment is even the only way to maintain alternative products in the current search field. Even Microsoft is helping other competitors enter the search field, such as DuckDuckGo using Microsoft's search index.
Sridhar Ramaswamy, the co-founder of a startup called Neeva who testified alongside Nadella, also told the court that Neeva's failure to thrive was largely due to Google's squeeze on the search market. Neeva was launched in 2019 by former Google executives with the hope of innovating internet search, however the company collapsed earlier this year.
Neeva differs as a search engine in that it operates on a subscriber model rather than an ad-based model, and artificial intelligence improves the search experience. Ramaswamy told the court that he believed advertising had gradually eroded the quality of Google's products, and that this decline seemed to leave an opportunity for Neeva to change the status quo. "People who have tried our AI experience really love it. It's a better, simpler, sleeker experience," Ramaswamy said.
However, because of Google's default placement, Neeva was unable to grow its user base fast enough to stay in business. Ramaswamy said Apple won't even add Neeva to the list of options, and nothing has come of negotiations on Android devices. "The complex nature of Android device contracts with Google makes it difficult for them to give Neeva even a chance to be chosen."
In terms of the progress of the case, foreign media predict that the trial in this case may last up to ten weeks and be divided into two stages: First, Mehta will determine whether Google violated antitrust laws in managing search engines and search advertising. Second, if Google is found to have violated the law, Mehta will decide how to fix the problem.He might simply order Google to stop violating the law, or he might order Google to sell assets.
Refer to the Microsoft antitrust case in the 1990s. Microsoft once faced a court ruling requiring it to be split up. Although it eventually turned around and avoided being dismembered and reached a settlement agreement with the authorities, Microsoft still paid the price of money and unbundling. PC manufacturers had more freedom to install non-Microsoft software. This also paved the way for the rise of third-party software such as Chrome in the early 21st century.
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