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Microsoft weighed taking huge loss on Apple deal to compete with Google search, exec says

Microsoft once considered eating a significant loss on a deal just so it could unseat Google as the default option on Apple’s web browser, a Microsoft executive said in the latest bombshell testimony to emerge from Google’s landmark antitrust trial on Thursday,

The feds say Google has built an illegal monopoly by making more than $10 billion in yearly payments to partner firms such as Apple and AT&T to keep its search engine as the default option and block rivals like Microsoft from gaining a foothold.

In 2016, Microsoft had internal discussions about whether to invest in an Apple deal that would have resulted in a multi-billion-dollar loss for the company — mainly as a way to chip away at Google’s market share, according to Jon Tinter, a Microsoft business development vice president.

“In the short term it would have been highly negative,” Tinter said, according to Bloomberg. “We told the board that we are thinking about making a multi-billion negative investment to support this.”

The talks were far enough long that Microsoft boss Satya Nadella met with Apple’s Tim Cook, Tinter added, but ultimately never came to fruition. The deal would have required Microsoft to share ad revenue from user searches with Apple.

Default search engine deals have emerged as a key point of contention through the first three weeks of the antitrust trial — the largest of its kind in two decades. Google controls roughly 90% of the online search market, dwarfing its competitors.

Google is in the midst of a landmark antitrust trial.

Tinter stated that Microsoft has struggled to land similar deals to make Bing a default option, despite proposing deals in which it would offer 100% or more of ad revenue to potential partners.

“We were just big enough to play but not big enough to win,” Tinter said.

Google’s lawyers have denied the company’s actions are anticompetitive, arguing that consumers choose to use its search engine because it is a best product of its kind on the market.

Tinton’s testimony followed remarks on the stand by fellow Microsoft executive Mikhail Parakhin, the company’s head of advertising and web services.

Microsoft CEO Satya Nadella reportedly met with Tim Cook in 2016 about a potential search deal.
AFP via Getty Images
Google attorney John Schmidtlein departs the E. Barrett Prettyman Courthouse in Washington, DC in September.
AFP via Getty Images

On Wednesday, Parakhin suggested to the court that Apple entertained negotiations with Microsoft as a “bargaining chip” to secure a sweeter default deal with Google, but had not seriously considered making a change.

“It is no secret that Apple is making more money on Bing existing than Bing does,’’ Parakhin said, sparking laughter in the courtroom.

Elsewhere, top Apple executive and Cook confidant Eddy Cue defended the company’s search engine deals with Google, arguing there “certainly wasn’t a valid alternative.”

Google landed default search engine status on Apple’s Safari browser in 2002 and most recently renewed the partnership in 2021.

Microsoft executive Jon Tinter testified on Thursday.
Thje Org

Google could be paying as much as $19 billion per year to land default status on Apple devices, according to estimates by wealth management firm Bernstein cited by CNBC.

The landmark antitrust trial has faced intense scrutiny from critics over the secrecy and lack of public transparency of the proceedings.

The testimony of several witnesses, including a significant portion of Cue’s appearance, was held in a closed court session due to concerns about sensitive internal company information.

Earlier this week, Judge Amit Mehta ruled that federal attorneys could resume posting trial exhibits to a public website – after earlier blocking them from doing so following complaints by Google.

Mehta defended his handling of the situation on Tuesday, stating that the DOJ should speak up if a particular piece of evidence or testimony was in the public interest.

“I’m relying largely on the plaintiffs, who represent the public interest, to let me know if you think it is objectionable to go into closed session,” Mehta said.

With Post wires

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