Microsoft’s chief executive says Google’s default agreements are ‘bogus.’

Microsoft’s chief executive Satya Nadella has called the idea of users having a choice in search engines for the internet “bogus”, because contracts make Google the default on mobile devices.

Nadella, in his testimony at an antitrust trial that pits Googleagainst US Department of Justice on Monday, took aim at the contracts the US Government’s case challenges. Washington accuses Google for preserving its dominance in the internet search market by paying more than 10bn per year.

The company denied any wrongdoing and argued that it was facing tough competition, as well as the fact that its market share came from its strong product.

Nadella stated in his testimony that defaults are key to the network effects of digital products. The trial in Washington is now in its fourth week. “Users may love a product with all their hearts, but they will not change the defaults.”

“This whole notion that users have a choice. . . is complete bogus. “Defaults are all that matters when it comes to changing search behavior,” he said. You get up, brush your teeth, and then search Google. “The only way to make a change is by changing the defaults.”

Microsoftis the leading Big Tech company in the court trial that is seeking to disrupt Google’s dominance of the internet search market through its Bing engine.

Nadella addressed Google’s deal with Apple that makes Google’s search engine Apple’s default browser, Safari. This agreement is a key part of the government case.

Nadella stated that he “focused every year” during his tenure as CEO “to see if Apple was open” to an agreement by default with Bing. This would be “needle moving” for Microsoft.

Nadella was asked by a federal prosecutor how much Microsoft would be willing to pay in order to replace Google as Apple’s default search engine. He estimated that Microsoft’s costs could be as high as $15 billion a year plus any other expenses.

Google claims that users can easily change the default settings. John Schmidtlein from Google suggested during Nadella’s cross-examination that Microsoft failed to invest enough to develop its search business despite the fact they had the financial resources. Nadella stated that he sought more funding when he was responsible for search at Microsoft but felt generally “well-supported” and “well-funded”.

Schmidtlein also claimed that Microsoft’s distribution agreements in the past “failed to achieve Bing scale” because users prefer Google. . . “searched on Google instead Bing”

Amit Mehta is the judge hearing the case and asked Nadella for his opinion on artificial intelligence’s potential to help close the “delta”, or gap, between Google Bing. Nadella confirmed that Microsoft invested $13bn in OpenAI, the company behind ChatGPT’s chatbot.

Nadella, however, said that the “vicious circle” of Google’s dominant search could “become even more vicious” by strengthening default agreements. He said there could be ways to “lock up the content that is the source of the power [of large language models]”.

ChatGPT, for example, is a tool that uses generative AI.

This case is being heard in Washington DC federal court and has been the most publicized monopoly trial ever since the DoJ in 1990 accused Microsoft of trying to crush Netscape, the pioneering web browser at the time, with Windows dominance. The judge had ordered the break-up of Microsoft. However, this ruling was overturned by an appeal.

Jonathan Kanter is now the head of DoJ’s Antitrust Unit. The case was originally brought by the Donald Trump Administration. Kanter’s tougher enforcement of antitrust laws, which he adopted after being appointed by Joe Biden to curb excessive corporate power, will be put to the test. He has compared technology with the “new oil” for the US economy.