What Microsoft CEO Satya Nadella said in court about Google, Apple, search, and the future of AI – GeekWire

Microsoft CEO Satya Nadella at a 2016 shareholder meeting. (GeekWire File Photo / Todd Bishop)

You may have read the juicy sound bites from Satya Nadella in Google’s antitrust trial this week, as the Microsoft CEO made the case that the search giant unfairly leverages its market power to stifle competition (a charge that Google vehemently disputes). But there was a lot more to digest from his comments.

On this episode of the GeekWire Podcast, we reenact portions of his testimony, explain the positions staked out by Microsoft and Google in the case, and discuss the irony of Microsoft siding with the DOJ two decades after its own antitrust battle.

Here are some additional highlights from his testimony:

Search defaults: “This entire notion that users have choice and they go from one website to one website or one search into one search … it’s [completely] bogus. There’s defaults. The only thing that [matters] in terms of changing search behavior. And at this point, in fact, it’s even more true. … You get up in the morning, you brush your teeth and you search on Google. And so therefore, with that such level of habit forming, the only way to change is by changing defaults.”

Google’s influence over distribution: “The one advantage Google has in defending their defaults … I think of as a game of carrots and sticks. We all try to defend by carrots, which is pay for OEM default distribution. Google has carrots and it has massive sticks. … ‘We’ll remove Google Play if you don’t have us as the primary browser.’ And without Google Play, an Android phone is a brick. And so that is the type of stuff that is impossible to overcome. No OEM is going to do that.”

Windows and Microsoft’s antitrust case: “Google exists because of two things. One is because of our consent decree, where we had to put a lot of limits on what we could distribute and not distribute by default. And, second, because [of] the fact that you could distribute anything you wanted on Windows, and it’s still the case, right, it’s not just Google. … The largest marketplace on Windows happens to be not from Microsoft, it’s Steam. And so it’s an open platform on which anybody can distribute anything.”

The future of AI: “I worry a lot, even in spite of my enthusiasm, that there is a new angle with AI. I worry a lot that, in fact, this vicious cycle that I’m trapped in can even become even more vicious because the defaults get reinforced. The publisher content can get locked in. And so if there are exclusive content deals which are happening right as we speak … all that content today, at least that’s crawlable by everyone and usable by large model training, could become exclusive.”

Google’s response: In court this week, lawyers for Google countered Microsoft’s argument by pointing to Google’s own success in getting users to switch defaults on Windows to Chrome and Google search as defaults. Microsoft’s problem isn’t Google, they argue, it’s the comparatively poor quality of its Bing search results.

Nadella said in response that Microsoft needs more data to be able to produce better results, which would come from more market share, which Microsoft contends Google is unfairly keeping it from achieving.

Apple and Bing: Microsoft’s negotiations with Apple to make Bing the default on iOS were the subject of much back-and-forth during Nadella’s testimony, including this entertaining exchange with John Schmidtlein, a lawyer for Google.

Nadella: So the point I was making to Apple — which, by the way, that is the only reason why they kept engaging, is with the Apple brand, it was not going to be called Bing. We had all kinds of strategic flexibility. It was going to be just like Apple Maps, that was the idea. This was not about trying to put Bing … front and center.

Schmidtlein: Oh, I see, you were going to hide the Bing brand?

Nadella: Yeah, of course. We were going to take whatever Apple felt was their chance as a success with the technology.

Schmidtlein: So you were going to try to hide the Bing brand behind the Apple brand and fool all the Google users into staying with Bing instead of switching back to Google, which is what they did on Windows in droves, right?

Nadella: That is not what I said.

Related links and coverage:

In the final segment of the show: Generative AI and the “Ghost of Lesser Seattle.” We revisit our attempt to channel the late, great Seattle newspaper columnist Emmett Watson with the help of ChatGPT, and assess the reaction.

Listen above, or subscribe to GeekWire in Apple Podcasts, Google Podcasts, Spotify or wherever you listen.

With GeekWire co-founders Todd Bishop and John Cook.

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