[1/2]The Microsoft logo is seen at the Microsoft store in New York City, July 28, 2015. The global launch of the Microsoft Windows 10 operating system will take place on July 29. REUTERS/Mike Segar/File Photo Acquire Licensing Rights
WASHINGTON, Oct 2 (Reuters) – Microsoft (MSFT.O) chief executive Satya Nadella called the idea that it is easy to change defaults on computers and smartphones as “bogus” as he took the witness stand on Monday in the U.S. Justice Department’s once-in-a-generation antitrust fight with Alphabet’s Google (GOOGL.O).
Nadella was dismissing an argument that Google has made – that it is easy to change defaults on devices. He said that Microsoft, itself a tech powerhouse, had sought to make its Bing search engine the default on Apple (AAPL.O) smartphones but was rebuffed.
The government has argued that Google, worth more than $1 trillion with some 90% of the search market, illegally paid $10 billion annually to smartphone makers like Apple and wireless carriers like AT&T (T.N) and others to be the default search engine on their devices.
The clout in search makes Google a heavy hitter in the lucrative advertising market, boosting its profits.
“Changing defaults today is easiest on Windows and toughest on mobile,” Nadella said.
“You get up in the morning and you brush your teeth and you search on Google,” he added in a reference to Google’s dominance in search.
Judge Amit Mehta, who will decide the case being tried in the U.S. District Court for the District of Columbia, asked Nadella why Apple would switch to Bing given the Microsoft product’s lower quality.
The question suggests Google’s argument – that it is dominant because of its quality and not because of illegal activity – has caught the interest of the judge.
Nadella responded that Microsoft had sought to show that Bing engineers would be able to “bridge the quality gap” with access to the number of queries made on Apple smartphones.
Turning to the next big tech market, artificial intelligence, Nadella testified that tech giants’ efforts to build large content libraries to train its large language models and build AI “reminds me of the early phases of distribution deals.”
“When I am meeting with publishers now, they say Google’s going to write this check and it’s exclusive and you have to match it,” he said.
Nadella became CEO of Microsoft in 2014, long after the tech giant had faced its own federal antitrust lawsuit. That court fight, which began in 1998 and ended in a 2001 settlement, forced Microsoft to end some business practices and opened the door to companies like Google.
As Google, which was founded in 1998, became an industry leading search engine, the two became bitter rivals. Both have browsers, search engines, email services and a host of other overlaps. They have recently become rivals in artificial intelligence, with Microsoft investing heavily in OpenAI and Google building the Bard AI chatbot among other investments.
Reporting by Diane Bartz; editing by Christina Fincher and Deepa Babington
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