This week it was the turn of Microsoft CEO Satya Nadelle to testify in the major lawsuit against Google. Most surprising was his statement that Microsoft’s Bing search engine is not as good as Google. But the reasons he gave for this are particularly telling.
As for why he wanted to try to compete with Google in the first place, he simply said “money.” He sees Search, or the market for Search, as a product that is even more attractive than Windows and Office. And then he doesn’t even have to have it all; For him, Bing doesn’t even have to be the biggest to make billions in profits.
What if Microsoft was standard?
If Microsoft were to become the exclusive search engine on Apple devices instead of Google, it would be a game changer for Microsoft. Nadella said Microsoft was willing to give all the economic benefits of the deal to Apple if Apple switched to Bing, and was willing to lose up to $15 billion a year in the process. He also said that he was even willing to hide the name “Bing” from Apple users’ search engines and respect the company’s privacy wishes. That’s how much he wants to get access to more data. According to him, becoming the standard is the only thing that matters, and he classified the idea that it is easy to switch to another search engine as ‘nonsense’.
When asked if Microsoft has tried to become Apple’s default search engine, Nadella said he has tried, but not only does Google pay huge amounts of money to Apple, but Apple is also afraid of what Google might do if it were to lose its default status. Google could then use extremely popular services such as Gmail and YouTube to promote its own web browser, Chrome, and completely push Apple’s Safari browser out of the market. That fear keeps Apple and Google together, he said.
Vicious circle
His testimony highlights the importance of collecting data and using it to improve the search engine, which is a better reason for advertisers to use the platform. An improved search engine is used more, which means more data, and so on. This is the virtuous cycle of search engines, and Nadella believes Bing could use that cycle to quickly match Google’s quality. But, if you are the underlying party, as Bing is now, this is a vicious circle that works against you: Bing’s lag keeps getting bigger, while Google gets better and better.
According to him, AI does have the potential to shake up the search market, but it is also possible that it will further strengthen Google’s dominance. Publishers and platforms are increasingly critical of the way their data is used to train AI systems. They could sign exclusive deals with Google for the use of their data and thus exclude others.
Data collection as the main purpose
Nadella’s story once again shows that it is almost impossible for other, or upstart, search engines to compete because Google is the default search engine everywhere, and because most people don’t change their default settings. But it also shows the enormous (financial) importance of collecting user data for further improving and fine-tuning advertisements. The company that has the most data can best tailor its advertisements to the target group and is the most attractive to advertisers. And right now, this is undeniably Google.
