2023.09.27 19:39
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"Century Anti-Monopoly" Case Exposes the Machinations of Tech Giants: Microsoft Claims Apple Uses Bing as a "Bargaining Chip" in Negotiations with Google

During the trial of the Google monopoly case, Microsoft executives revealed that they have been trying to persuade Apple to use Bing as the default search engine. However, Apple has never seriously considered it and instead used it as a bargaining chip with Google. Apple actually earns more money from the existing Bing than Bing itself.

During the "Century Antitrust" trial that will determine the future of Google Search, long-time rival Microsoft has exposed the tactics it used to cooperate with Apple, a long-term partner of Google Search. Taking advantage of Microsoft's attempt to challenge Google's search engine dominance, Apple sought to gain more benefits from its cooperation with Google.

On Wednesday, September 27, Eastern Time, during the trial of Google's monopoly case in Washington, Mikhail Parakhin, the head of Microsoft's advertising and web search, testified that Microsoft had been trying for years to persuade Apple to use Bing as the default search engine on the iPhone. However, Apple never seriously considered changing its choice and instead used Bing as a bargaining chip in negotiations with Google.

Parakhin revealed that Microsoft had met with Apple in 2021 to discuss the possibility of Apple switching to Bing, but no progress was made. He said:

"Apple makes more money through the existing Bing than Bing itself. We (Microsoft) have been trying to convince Apple to use our search engine."

In response to questions from Google's lawyers in court, Parakhin revealed the pressure Microsoft faced. He said that for Microsoft, increasing investment in the mobile search market was "uneconomical" unless Microsoft received much more or firmer distribution guarantees.

Wall Street News previously mentioned that in the Google search monopoly case that began two weeks ago, the US Department of Justice accused Google of spending over $10 billion a year and signing exclusive agreements with companies like Apple to maintain its default search engine position on the internet and mobile devices.

The Department of Justice also claimed that Google has been "illegally maintaining" its monopoly position since 2010 and currently holds about 89% of the internet search market share.

Among the multiple charges against Google by the Department of Justice, the cooperation between Google and Apple is a crucial point of contention. There is currently no official data showing how much revenue Apple generates from its agreement to use Google Search, and the specific revenue amount is confidential. However, the Department of Justice estimates that Apple can earn between $4 billion and $7 billion annually through this agreement.

After the trial of the Google monopoly case began this month, Kenneth Dintzer, a representative lawyer for the Department of Justice, pointed out that Google had rejected Apple's proposed changes to the agreement and threatened to cancel the revenue-sharing terms for advertisements. "This is the behavior of a monopolist," he said.

The agreement between Google and Apple was signed nearly 20 years ago in 2005, at the beginning of Google's establishment. The agreement designated Google as Apple's default search engine, and Apple would receive 50% of the advertising revenue generated from Google searches on the Safari browser.

Since then, Google has been paying Apple billions of dollars each year to maintain its position as the default search engine on Safari, benefiting both tech giants. In 2016, Apple and Google expanded the scope of their agreement to include other Apple features such as Siri and Spotlight, further solidifying their cooperation. According to an analysis report by Sanford C. Bernstein&Co., Apple's revenue from such partnerships reached $18 billion in 2022. Meanwhile, Google has always benefited from Apple's position in the mobile internet, occupying 90% of the entire search market.

However, data from StatCounter shows that Microsoft's Bing currently only holds a 6.4% market share in the United States, while Yahoo, which uses Bing, holds an additional 2.4% share.

Dintzer, a lawyer from the Department of Justice, believes that this antitrust case is about the future of the internet and whether Google's search engine will face substantial competition.

For Google, this case directly affects the company's largest source of revenue to date. In 2022, search advertising accounted for nearly 60% of the company's revenue, reaching $162.45 billion.

After the antitrust case went to trial this month, Google's lawyers argued that Google became the top search engine because users prefer Google over its competitors. Companies choose Google as the default search engine because it is the best choice, not because of a lack of competition.