Following ten years of disputes, the companies came together in 2016 to establish a non-aggression pact, aiming to reset their contentious relationship and begin anew.Search competition has broken
In 2020, the five-year truce between tech titans Alphabet Inc. and Microsoft Corp. unraveled due to a clash over their competing web-search businesses, a development revealed during the US government’s antitrust trial against Google.
After a decade of ongoing conflicts, the two companies had sought to mend their contentious relationship in 2016 by forging a non-aggression pact. However, the situation began to deteriorate three years later. Jonathan Tinter, a Microsoft vice president of business development, testified that Alphabet insisted Microsoft include a Google search widget on the main screen of its Surface Duo touchscreen smartphone as a condition for licensing the Android operating system. This condition was imposed instead of allowing Microsoft to use its own search engine, Bing. Google also prohibited Microsoft from guiding users on how to switch the default search engine to Bing.
Tinter, who negotiated the deal in the spring and summer of 2020, highlighted the importance of obtaining a license from Google for the success of the Duo device. While Microsoft preferred the search entry points to be Bing, Google insisted on using its search engine.
Tinter is one of several Microsoft executives testifying as part of the Justice Department’s antitrust lawsuit against Google, with Microsoft CEO Satya Nadella expected to testify soon. The government alleges that Google has monopolized the online search market through contracts, including substantial payments to Apple Inc. and smartphone manufacturers to establish its search engine as the default option on browsers and mobile devices. Google has defended its position by stating that consumers prefer its search engine and can easily switch if they wish.
Ultimately, Microsoft and Google reached a “compromise” for the Duo device, allowing both search engines to appear on it. A search widget, the Chrome browser, and the Google Search app would utilize Google, while Microsoft’s Edge, the default browser, would use Bing.
In August 2020, Microsoft started taking orders for the $1,400 dual-screen folding Duo, marking its return to the handset market after a setback in 2016 when the acquisition of Nokia Oyj’s handset unit resulted in a costly writedown. Despite some initial interest, the Duo struggled, with Microsoft offering discounts within months of its release. A year later, it was selling for less than half its original price.
The 2016 agreement between the companies included a formal process for handling disputes that might have previously gone to regulators. In March 2020, Microsoft officially complained to Google about issues with its Search Ads 360, a tool for managing advertising campaigns. This dispute led to discussions between the companies’ top lawyers. Tinter was also involved, discussing matters with Google’s Don Harrison, president of global partnerships and corporate development.
As a response to Microsoft’s escalation, Google officially raised a concern about the terms of Microsoft’s cloud program, which excluded Google Drive products – competing productivity software for word processing, email, and spreadsheets. Tinter indicated that Microsoft informally agreed to cover the costs of Google making changes to Search Ads 360.Search competition has broken
Ultimately, while the two companies resolved their cloud-related issues through negotiation, they could not resolve the problems with the search advertising tool, leading to no formal agreement on either matter. Consequently, they walked away without reaching an agreement.
Furthermore, the peace deal between Microsoft and Google also lapsed in 2021, marking the end of their period of detente.
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