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Commentary: Why is Microsoft strangely silent about Google’s antitrust lawsuit?
The silence says a lot about how the relationships between the biggest US tech companies — part-rival, part-ally — have evolved, says the Financial Times' Richard Waters.
FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Microsoft logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo
SAN FRANCISCO: In the clamour stirred up this week by the US government’s antitrust suit against Google, one voice has been noticeably absent: That of Microsoft.
As the owner of the second most widely used search engine, Microsoft might be expected to have a lot to say about the fact that Google stands accused of sustaining its dominant market position by illegally shutting out search rivals.
Microsoft’s Bing, one of the services most affected by the alleged wrongdoing, figures prominently in the Department of Justice’s (DoJ) complaint, with 13 mentions.
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But after reaching a legally binding pact with Google some years ago that limited the ability of either side to complain to regulators, Microsoft has been notably silent — and won’t even respond to direct questions about the Google search issue.
The silence says a lot about how the relationships between the biggest US tech companies — part-rival, part-ally — have evolved.
And it shows how hard it will be for regulators to pick apart the close ties of mutual self-interest that bind Big Tech.
KEEPING ENEMIES CLOSE
The detente between the two tech giants dates back to 2015, soon after Sundar Pichai became the chief executive of Google.
Like Satya Nadella at Microsoft, he believed the two companies had more to gain from working together than continuing a long legal fight.
At the heart of their deal — which included dropping a barrage of lawsuits — was an agreement not to take their complaints about each other to regulators.
The deal was set for a five-year term — something that was not reported at the time.
That means it is ending at just the moment when Google is back in the hot seat.
It also means that Microsoft has effectively been silenced during a period in which US regulators and politicians have been scrambling to make up for years of inaction in trying to hold the biggest tech companies to account.
Neither company will say if their legal pact is being extended.
But they remain the closest of allies, and have agreed a number of significant strategic technology partnerships in recent months that show they expect to work closely far into the future.
Even if the formal non-disparagement part of the understanding were to expire, it might still work to Google’s benefit.
According to one person familiar with its terms, the provision covers events that happened in the years it was in place — meaning Microsoft might find it hard now to raise objections to Google’s business practices over the past half-decade, even if it wanted to.
But another with knowledge of the agreement said it did not prevent Microsoft responding to cases that are already under scrutiny.
PLAYING THE REGULATORS
Both Google and Microsoft have always maintained that they do not hold back in markets where they directly compete.
But taking away the power to lobby regulators removes a powerful weapon.
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Big competitors are often the ones with the resources, the knowledge of the market and the political connections to make sure an issue gets full attention in the halls of power.
The EU’s first case against Google, for instance, owed a great deal to Icomp, a trade association in Brussels that was almost entirely funded by Microsoft.
Foundem, a small UK company which made the complaint to Brussels that helped trigger the case, had ruled out the idea of seeking regulatory relief before it was steered in that direction by Icomp.
It isn’t particularly edifying to see giant companies trying to play the regulators like this but at least it means important issues aren’t overlooked.
Tech giants often claim that they face plenty of fierce competition from each other.
But direct incursion into each other’s core markets has been rare: Google and Facebook tried, a decade ago, to invade each other’s markets, but soon withdrew.
As a result, the most profitable parts of consumer tech are characterised by monopolies or duopolies.
Members of the tech elite also have a habit of trying to use each other’s power to make themselves look less threatening.
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A Google official, for instance, points out that Microsoft’s stock market value is 50 per cent higher than that of Google’s parent company Alphabet, and questions whether it would really be in consumers’ interests if the software giant turned out to be the biggest beneficiary of the US government’s legal action.
Such attempts ring hollow now that the big five — Alphabet, Amazon, Apple, Facebook and Microsoft — are worth more than US$7 trillion.
As US antitrust enforcers prepare for a long legal campaign to keep tech power in check, finding ways to pick apart their ties will be just one of the challenges.
