- Daily Zen
The gloves are off, and it is open season for Microsoft and Google, as they end a six-year truce to not litigate against each other or carry grievances to the regulators.
As regulating authorities all over the world look into the monopolistic practices of Big Tech companies, the two giants have decided to let their pact, entered into in 2015, lapse.
The no-conflict agreement came into being after Satya Nadella, and Sundar Pichai took over their respective companies—Microsoft and Google. Under the pact, the companies agreed to settle disputes out of court and not run to regulators with their complaints before trying to find a viable solution.
This brought down the competition somewhat, although both still vie hard for a market share of cloud computing and online productivity applications. Google is competing for this space that is dominated by Microsoft’s Azure cloud-computing and Office productivity businesses.
Microsoft also wants Google to make its digital advertising services interoperable with other companies, something that would make the industry more competitive. Google’s role is being probed by various world regulatory agencies in curbing other advertisers, publishers, intermediaries and rivals on its search engine and other affiliated platforms.
“If you want to advertise, if you want to sell advertising or buy advertising on the internet, you have to use Google’s tools, and when they make their tools in a manner that fails to interoperate easily with others, it impacts everybody,” said Microsoft President and Chief Legal Officer Brad Smith in a Bloomberg interview in April. “We raised the concerns with them and they just turned a deaf ear.”
Rik van der Kooi, vice president of Microsoft Advertising, estimates Google’s moves in ad tech are costing the software maker hundreds of millions in ad revenue every year. It impacts its search engine Bing as well as the Yahoo and DuckDuckGo search engines that use Bing technology.
Analysts were happy that the two companies agreed to behave and not use dirty competitive practices against each other. “It’s always a little puzzling when you see direct competitors working on private agreements,” Eric Goldman, a law professor at Santa Clara University, said of the 2015 pact. “The tricks Microsoft was playing on Google were hurting the entire industry — including Microsoft,” Goldman added.
Microsoft had earlier come up with a series of ads called “Scroogled” that accused Google of employing techniques to boost its profits by “screwing” its users. In March, Microsoft’s Smith had been very vocal against Google’s decision to withdraw search services in Australia rather than pay media houses for publishing their content on the site, as required by the government.
Microsoft agreed to no litigations and regulatory interference on matters just at the time when Google was facing increased scrutiny for its ad business practices and privacy issues and gathering of unnecessary information that could be used for targeted advertising and more without the users’ permission.
Microsoft, by contrast, has not featured in the antitrust investigations into Big Tech groups despite being valued at more that $2 trillion, according to the latest figures.
Closer business co-operation between the companies has not benefitted both equally. Attempts to get mobile apps built for Google’s Android operating system to run on Windows personal computers have not been successful.
The escalation of rivalry at this time of heightened scrutiny and moves against monopolistic practices may backfire for both Microsoft and Google.