Microsoft Exec Claims Apple Utilizing Bing to Obtain More Funds from Google

During the significant U.S. antitrust trial, a Microsoft executive testified on Wednesday that Apple had never truly intended to replace Google with Microsoft’s Bing as the default search engine on Macs and iPhones. Instead, Apple had kept this possibility open as a strategic move to negotiate larger payments from Google.

“It’s no secret that Apple makes more money from the existing Bing than Bing does,” Microsoft’s head of advertising and online services, Mikhail Parakhin, said in U.S. District Court in Washington. The comment drew laughter from the courtroom. Parakhin described Microsoft’s years of futility in trying to supplant Google with Apple devices.

Analysts estimate that Apple collects $15 billion to $20 billion a year from Google in revenue-sharing payments in exchange for giving its search engine a coveted default spot on Apple devices. Revenue is generated when users click on ads in search results.

The US Department of Justice accuses Google of using similar agreements to shut out rival search engines such as Bing and Yahoo, stifling innovation. The trial began on September 12 and is expected to continue in November.

Another witness, the founder of the startup Branch Metrics, testified that Google’s exclusive deals with phone companies and device manufacturers sabotaged his efforts to market a smartphone app search engine.

Alexander Austin said his Palo Alto, Calif.-based company was forced to scale back what its product could do to avoid running afoul of Google’s agreements with companies like Samsung and Verizon that make Google’s search engine the default choice on digital devices. Branch Metrics had hoped to do for smartphone apps what Google had done for Internet search — and collect advertising revenue when users click on apps like DoorDash.

“We had very high hopes and good feedback from advertisers,” he said.

But Branch Metrics’ potential partners feared the app search product, called Discovery, would violate their lucrative contracts with Google. Branch Metrics had to limit application results and avoid links to the Internet. The result was that it could not monetize its app search engine.

“It felt like an injustice was being done that a product like this couldn’t see the light of day,” Austin said.

Google attorney Ken Smurzynski, who cross-examined Parakhin earlier, tried to rebut one of the government’s central arguments: Google’s current market position allows it to collect vast amounts of user data to improve search results and expand its lead over competitors.

Google’s team counters that dramatic improvements in AI mean search engines can improve results without using user data. Smurzynski presented a document in court that contained Microsoft CEO Satya Nadella’s comments on the matter.

“Artificial intelligence is fundamentally changing every category of software, starting with the biggest category — search,” Nadella said in a February Microsoft blog post.

But Parakhin compared AI to driverless cars: not quite ready for prime time. Asked if a search engine could be built based on machine learning alone, U.S. District Judge Amit Mehta replied: “We’ve seen companies try. We’ve seen no one succeed.”

Mehta will probably issue a verdict in the cartel case only at the beginning of next year. If he decides that Google broke the law, another trial will determine how to curb its market power.

One option would be to prevent the Mountain View, Calif.-based company from paying Apple and others to make Google the default search engine.