In a blog post entitled “Competition Authorities and Search,” Microsoft Vice President and Deputy General Counsel Dave Heiner said part of the motivation for Microsoft and Yahoo’s search deal was “we are concerned about Google business practices that tend to lock in publishers and advertisers and make it harder for Microsoft to gain search volume.” The post comes at the end of a week in which European authorities asked Google to explain its search algorithms after complaints from competitors–one of which is owned by Microsoft.
“Microsoft would obviously be among the first to say that leading firms should not be punished for their success,” Heiner wrote in one of Microsoft’s strongest public statements regarding Google to date. “Our concerns relate only to Google practices that tend to lock in business partners and content (like Google Books) and exclude competitors, thereby undermining competition more broadly.”
A Google representative declined to comment on Microsoft’s post.
For all the obsession about Google’s supposedly deteriorating relationship with Apple, make no mistake: the two most diametrically opposed companies in the tech industry are Microsoft and Google. The two titans are increasingly locked in a struggle to define the next generation of computing.
Microsoft, of course, has two franchises to defend against Google’s moves into operating system and office productivity software, as well as the broader philosophy that the Web–rather than the desktop–is the platform of the future. And for all Google’s financial might, it remains mostly a one-trick pony with the vast majority of its resources financed by its search dominance: exactly where Microsoft is aiming with Bing and the Yahoo partnership.
It’s personal, too. “Novell, when current Google CEO Eric Schmidt was at the helm, was never hesitant about complaining to regulators about Microsoft,” Heiner wrote. Microsoft CEO Steve Ballmer and Schmidt are said to despise one another; according to court documents, Ballmer pledged to “f***ing kill Google” after learning of Google’s plan to hire a key Microsoft engineer in 2005.
Google has definitely been in the sights of governments around the world over the last several years, although the European Commission’s decision to look into its search practices represents a new step. The U.S. Department of Justice was prepared to block a Google-Yahoo search partnership designed to fend off Microsoft in 2008, and has objected to Google’s settlement with publishers and authors that is also opposed by the Open Book Alliance: a Microsoft-backed organization.
Competitors have fueled much of this scrutiny, which is how antitrust regulation has begun for decades. As Heiner noted above, Microsoft faced a litany of complaints from competitors that ultimately led to government prosecution, and similar complaints have prompted government action against AT&T and IBM in the past.
“Of course, as we have always said, it is vitally important that competition law authorities also listen to and assess the views of customers, business partners and everyone else affected by a dominant player’s business practices. Ultimately what’s important is not who is complaining, but whether or not the challenged practices are anticompetitive,” Heiner wrote.
As part of Microsoft’s meetings with the DOJ over its recently approved search deal with Yahoo, it acknowledged that the conversation turned to Google on several occasions. It’s no secret that Microsoft has advanced arguments against Google in the past through a variety of consulting firms and lobbyists, but has very rarely fired such direct and public shots against the company.
“Both search and online advertising are increasingly controlled by a single firm, Google,” Heiner wrote. “That can be a problem because Google’s business is helped along by significant network effects (just like the PC operating system business). Search engine algorithms ‘learn’ by observing how users interact with search results. Google’s algorithms learn less common search terms better than others because many more people are conducting searches on these terms on Google.”
Google has in the past rejected this argument–the company’s chief economist Hal Varian went so far as to call it “bogus” last August–in saying that smaller competitors who want to improve their search algorithms can conduct wider testing on the samples they already have. Still, it seems this is a key part of Microsoft’s push against Google, arguing that its sheer scale discourages competitors from believing they can match Google’s mass of data.
Both Google and Microsoft are at turning points in their history as this debate grows louder. Microsoft’s shot will not be the last.
Category: Tech News
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