According to rival Microsoft, when it comes to online searches, it’s Google’s website and everyone else plays on it.
That was the gist of Microsoft CEO Satya Nadella’s statement in federal court Monday in the government’s antitrust lawsuit against Google. According to Nadella, Google’s strong market share in online search means that publishers and advertisers structure their material according to Google’s specifications, making it difficult for competitors like Microsoft’s Bing to gain a foothold.
“Everyone talks about the open web, but there is actually the Google web,” Nadella said from the witness stand in District Court in Washington, DC. Nadella was referring to how publishers often tailor their content and advertising to Google products, for example by optimizing their pages for how Google ranks search results.
Lawyers from the Justice Department and a coalition of state attorneys general who are suing Google for allegedly violating antitrust laws by illegally retaining a monopoly in the overall search market questioned Nadella. The government claims that Google monopolized the distribution channels of general search engines by establishing exclusive partnerships with browser and phone manufacturers to be the default option on various platforms. The multibillion-dollar deal between Google and Apple to make Google search the default for Apple products like the iPhone is perhaps the best-known of these partnerships. Additionally, you can also read about: Microsoft CEO Satya Nadella testifies about competing with Google in antitrust trial.
The government has attempted to argue that Google’s dominance, aided by these exclusive deals, produces a flywheel effect in which greater user exposure generates more data to improve Google’s search results and attract more advertisers to the product. This generates more revenue, which can then be used to fund these huge distribution deals.
Meanwhile, the government says competitors are finding it increasingly difficult to reach consumers and, as a result, are missing out on opportunities to make bigger profits or advances in search.
In his statement Monday, Nadella reiterated that point, detailing the challenges a broad search competitor like Bing faces in gaining market share from Google.
Google did not respond to Nadella’s comments.
Launch a Bing deal with Apple
According to Nadella, Microsoft was willing to incur billions of dollars in short-term losses to get Bing to pay Apple enough to make its search engine the default on Apple products. Not only would Microsoft have to replace the revenue Apple currently receives from Google from default placement, which Bernstein estimates could reach $19 billion this year, but Nadella also said it would have to cover the risk Apple would incur. by changing the default settings. .
Nadella has “focused each year of my tenure as CEO on whether Apple would be willing” to accept Microsoft’s default offer, and they have had “a number of conversations about it.”
Microsoft’s CEO acknowledged the reputational risk of changing the default settings, but used an example from Apple’s own history to demonstrate why he believed it could be overcome. When Apple first released its maps app, it was heavily criticized for being flawed or incomplete. However, after a time of “turbulence,” according to Nadella, it has gained popularity, due in large part to the fact that Apple makes it the default on its phones.
During cross-examination, John Schmidtlein of Williams & Connolly, who represented Google, referred to a document that stated that Bing’s market share on Windows was approximately 24%. Schmidtlein questioned Nadella’s belief that that percentage would persuade Apple to change its default Safari to Bing, considering that Bing has “100% distribution” on Microsoft Windows.
The most important factor, according to Nadella, was proving that Bing could retain customers with default settings despite Google’s dominance. That argument, she said, “was the only reason they continued to interact,” referring to Apple.
If Apple signs a deal with Microsoft, it believes it will employ Bing’s technology and brand it as its own Apple search engine.
Schmidtlein also explained to Nadella about Microsoft’s previous attempts to make Bing the default search engine on various mobile devices, which were met with public backlash or resulted in many users switching to Google anyway. For example, she cited a 2010 Washington Post article that attacked Verizon’s decision to make Bing the default search engine on a new Android phone at the time.
But Nadella said that kind of feedback actually influenced his later negotiations with Apple about making Bing the default search engine on its iPhones, because he was aware of the difficulties both companies would face if that deal went through.
Read more: Google antitrust case: Is the search giant too big to fail? [Latest Updates]
Why Microsoft remains in the search
Throughout his testimony, Nadella explained why Microsoft chose to continue the search despite the challenges, highlighting how the business is being persistent and waiting for the right opportunity to shake up the market.
The IT corporation aims to “make search more competitive,” according to Nadella, by operating as a “public utility.”
The notion that customers have unlimited control over their default settings is “completely false,” according to Nadella, who adds that altering default settings on mobile platforms is difficult since “they’re all locked down.”
It’s not just about getting a flood of new users when you become the default. It also involves collecting more information from users about what they search for and click on. This type of data can be used to inform search engine judgments, making results more valuable and tailored to consumers’ needs.
Even if Microsoft is a “very, very low share player” in the overall search industry, Nadella feels there is still room for innovation in what he considers the “largest software category out there.” He claimed that when he became CEO in 2014, he focused on making Bing profitable so he could continue making investments, as he is now.
While it maintains its low market share, Nadella said he’s hoping for a “paradigm shift” that opens a window of opportunity for Bing, similar to what concessions stemming from Microsoft’s own antitrust case were provided to Google by the government. at the time. of the century.
Meanwhile, Nadella estimates that Microsoft has spent roughly $100 billion on Bing over the past 20 years.
“It’s hard to make progress, but no one can accuse us of not being persistent,” Nadella said.
According to Nadella, building a new competitor from scratch is challenging because it involves both fixed expenses and costs that increase as market share increases. Internet search is considered one of the biggest “no-fly zones” in Silicon Valley, she noted.
Bing has had some success in desktop search, thanks in part to the ability to set Bing as the default in your Edge browser, which many PC makers choose to pre-install to get a discount on Microsoft’s software license.
Still, many people choose to use Google’s Chrome browser and search engine on Windows devices. According to Nadella, Google’s stance on Windows desktops demonstrates how open Microsoft’s own ecosystem is. However, he agreed that Google is still the most searched word on Bing.
However, Google’s lawyer tried to highlight the fact that Microsoft did not adequately invest in mobile search, citing emails in which officials estimated that Google had many more people working on mobile search than Microsoft. Nadella said he concentrated resources where they could gain the most momentum, such as on desktop computers, and that a broader dispersion would help justify more spending.
When later asked by a government lawyer why Google would pay so much if it kept more search queries in Safari even if Bing was the default, Nadella responded that he would “love the opportunity” to have Google not pay.
“Maybe on behalf of Google shareholders,” he said.
‘Pound of sand’
State AGs are also trying to show that Google used its search advertising tools to hurt competitors like Bing by not making them sufficiently compatible with other products. Microsoft has tried to make it possible for advertisers to seamlessly migrate their campaigns between Google’s search advertising tools and Bing, but Google has not been cooperative, according to Nadella.
Although Nadella claimed that he doesn’t remember exactly where things were in their discussions, he summarized it this way: “We keep asking them to add some features that we want, and I think they’re asking us to work harder.” He stated that integration issues with Google’s Search Ads 360 “continue to arise more and more” for him.
Through roundtables with advertisers, Nadella found that many believe there is an opportunity cost they should consider between investing time and money on Bing versus Google’s platform, given that transferring campaigns is not as simple as it could be and Google has a larger audience.
AI could bring a ‘much worse nightmare’
As artificial intelligence becomes more popular in search, Nadella expressed concern that Google could use its position to close off even more options to competitors. Microsoft, in collaboration with OpenAI, has begun incorporating ChatGPT into its Bing search results and is a key player in the sector, alongside Google. Despite the initial success, Nadella is concerned about losing access to important data sets that could be used to train the system.
“I’m very concerned, even despite my enthusiasm, that there’s a new angle to AI,” Nadella said. “I’m very worried that this vicious cycle I’m trapped in could become even more vicious.”
This is because Google may want to create content on its YouTube search engine and video platform that is used solely to train its own AI large language models (LLM).
Competing with Google’s main economic advantage “will be even more difficult in the age of AI,” according to Nadella.
He stated that AI could make “progressing in search an even worse nightmare because there is a new avenue to block – which is basically fueling the power of these LLMs, which is the content.”
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Categories: Technology
Source: vtt.edu.vn