TRIAL UPDATE #5: “It’s Not the Open Web, It’s the Google Web” - Microsoft CEO
October 2, 2023
Week 4 in court of the landmark U.S. vs Google trial kicked off with Microsoft CEO Satya Nadella holding no punches calling out the $1.7 trillion company’s monopoly in search using predatory default agreements with other big tech and mobile companies.
Our friends were in court today on day 14 of the trial. Here are their notes from Nadella’s testimony in court, they aren’t verbatim and are from hand-written notes, since no recording devices are allowed in the most important anti-monopoly trial to hit the U.S. in decades: Testifying in court, Nadella told the judge:
“It’s not the ‘open web’, it’s the Google web”
“Entire notion that people have choice is complete bogus”
We’re in a “vicious cycle” and need to break it
Specifically talking about Microsoft’s struggles competing with Google search, the CEO shared:
Search is by far the largest software category, when you look at revenue
Bing is waiting for a market intervention or a new innovation to grow market share
Google only exists for two reasons: the judgment against Microsoft in the landmark 2001 antitrust case and Google’s distribution deals
Apple and Google have a “fantastic oligopolistic arrangement”
Microsoft operates Bing, Google’s largest search engine rival, yet Google dominates 90 percent of the market through restrictive default contracts with companies like Apple. Before Nadella became Microsoft’s CEO, he was a top executive overseeing Bing.
Nadella also revealed that Google “has carrots, and it has a massive stick,” when trying to intimidate phone makers and carriers into making Google the search engine. That stick is withholding the Google Play Store, the most popular app marketplace for phones not created by Apple. “Without Google Play,” as Nadella said, “an Android Phone is a brick.”
“Share and scale is quality,” he said later on. “You need to get to high share in order to have a high-quality product long term.”
Nadella also noted that Google’s predominance in mobile search gives it an advantage in “dynamic data access,” meaning Google can collect and analyze user behavior quickly and respond by immediately modifying its search algorithms.
Looking to the future of AI and how Google’s current trajectory with a monopoly in search will play out in the future, Nadella showed his grave concern:
AI is when this “vicious cycle gets more vicious”
worried about exclusive content deals, worried Google “will lock up content”
ChatGPT doesn’t do anything to solve the scale problem
A reminder here that laptops, phones and recording devices are not allowed in court, nor is a live feed allowed from court. Most of us have to wait and pay for expensive transcripts to access what is said in the “open” part of this trial, which can cost about $1000 a week. Until now the proceedings have been largely secret to protect big tech, upon their request. But the judge is now leaning to make the trial more open.