What is Microsoft’s grouse against Google that led to Satya Nadella’s explosive testimony at the trial?

Microsoft CEO Satya Nadella gave an explosive testimony at the antitrust hearing of Google which also reveals the rivalry between the two companies that goes a long way back.

Know the reason why Microsoft CEO Satya Nadella called out Google for its market dominance. (AP)

Microsoft CEO Satya Nadella was invited to testify as a witness for the US government against Google in a massive antitrust trial. The case will establish whether Google illegally created market dominance to push out rivals from existing and operating in the same way. Interestingly, Microsoft is one of the companies that also claims to be affected by Google's alleged monopolistic practices that have kept it out of the search engine business. But what really is Microsoft's grouse against Google? Turns out, it goes a long way back.

Microsoft's rivalry with Google

Today, Google dominates the search engine segment emphatically. However, it did not really get the early bird treatment when it comes to the space. In fact, Google had competition in this space right from the start. The company was battling MSN Search which came out in 1998, just like Google Search.

However, Google was able to build a search product that quickly rose through the ranks and left Microsoft behind. In fact, Microsoft attempted multiple times through the years to rebuild and create an impact with its own search product as it renamed MSN Search to Windows Live Search in 2006, then again as Live Search in 2007, and finally Bing in 2009.

Google's lead counsel John Schmidtlein argued during the cross-examination of Nadella's testimony that Bing was an inferior search product because Microsoft mismanaged it for more than two decades. He also highlighted that the reason Google triumphed was that it ‘out-invested and out-executed' Microsoft.

But Nadella had a different point of view during his speech. He highlighted a number of exclusive deals Google had struck with companies, most notably Mozilla Firefox and Apple, to become the default search engine on their products, making Microsoft Bing an afterthought.

He explained that the Apple deal was a game changer in particular as it made Google the default search engine on Safari on every single iPhone, iPad, MacBook, and other Apple devices. Nadella revealed that he was even prepared to give Apple all the economic benefits from the deal and lose as much as $15 billion a year if he were to have that deal. “Defaults are the only thing that matters in terms of changing user behavior,” he said.

The comment paints a clear picture of why Microsoft believes it was pushed out of the business by Google, and why Google argues that the downfall of Bing was entirely due to Microsoft's mismanagement. Now, Judge Amit Mehta sits on the chair to help arrive at the decision of whether anti-competition practices were leveraged by Google. If the ruling goes against Google, Microsoft will also be keen to know the new regulations that can be applied to ensure the coexistence of healthy competition in the space, as it can give Bing a major boost.

And perhaps that's why Nadella also pointed out that Microsoft and Google have been rivals in multiple businesses in the past, and will continue to do so in the future, and with every such battle, things can get even more "vicious". The concerns were big considering that artificial intelligence is at stake now.

“Despite my enthusiasm that there is a new angle with A.I., I worry a lot that this vicious cycle that I'm trapped in could get even more vicious,” Nadella said.

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