Feud 2.0: Google and Microsoft fight heats up

Joseph Brookes
Senior Reporter

Google has returned fire at Microsoft after the Redmond-based behemoth singled out the search and advertising giant in calls for more technology and media regulation in the United States. Microsoft’s intervention has reopened fissures between the companies not seen since the company’s 2012 ‘Scroogle’ campaign.

Following the introduction of Australia’s News Media Bargaining Code, which can force designated platform companies into ‘final offer’ arbitration with news publishers to determine revenue sharing models, Microsoft is now pushing for similar laws in the US as part of potential wider reforms to address big tech dominance.

Google and Facebook railed against Australia’s latest media laws while Microsoft backed the laws, offering to fill the search void if Google followed through on its threat to leave the Australian market because of the code.

In the abstract: It’s on like Donkey Kong between the tech giants as regulatory pressure mounts

On Friday, Microsoft advocated to a US antitrust House Committee for an “Australian approach” to address the “structural imbalance between a technology gatekeeper and the free press”.

Microsoft president Brad Smith told the committee Australia’s new media laws, while not yet invoked, are “proving effective in driving negotiations” of more than $100 million in deals between Facebook and Google and news media companies.

But Mr Smith reserved much of his address to lawmakers to highlight Google’s omnipresence in the digital advertising ecosystem and the company’s use of news content, which he argued is having a chilling effect on journalism and democracy.

Mr Smith outlined Google’s rise and dominance of not only the search business but also the wider market for digital advertising services that have allowed the company, along with Facebook, to capture most of the value from the shift to online advertising.

But Google, which takes around a third of every dollar spent on digital advertising in the US, is unique, Mr Smith told lawmakers, because “it is the dominant technology firm in virtually every corner of the digital advertising ecosystem”.

According to Mr Smith, Google’s rise has come at the expense of traditional media, but it is not a case of fair disruption.

“News organisations have ad inventory to sell, but they can no longer sell directly to those who want to place ads. Instead, for all practical purposes they must use Google’s tools, operate on Google’s ad exchanges, contribute data to Google’s operations, and pay Google money,” Mr Smith said.

“All this impacts the ability of news organisations to benefit economically even from advertising on their own sites.”

Australian regulators are currently examining the potential conflicts of interest for Google in the digital advertising ecosystem and a lack of choice for other stakeholders in the local market, through an ACCC inquiry into the supply of digital advertising services.

US Authorities, too, have locked in on Google, including multiple antitrust cases brought by an overlapping network of state and federal enforcers late last year.

While the Microsoft President stopped short of saying antitrust committees should pursue Google, he urged the committee to consider what it can do as regulators elsewhere tightened their focus on big tech.

“We respect [Google’s] sustained creativity, investments, and determination. But as we learned first-hand from Microsoft’s own experience two decades ago, when a company’s success creates side effects that adversely impact a market and our society, the problem should not be ignored. And this typically requires government action.”

Later on Friday, Google released a statement accusing Microsoft of “reverting to their familiar playbook of attacking rivals and lobbying for regulations that benefit their own interests”.

Microsoft’s calls for more scrutiny of Google come as the company manages a widespread cyber security attack that exploits vulnerabilities in its popular email software. The timing is not coincidental, according to Google.

“Microsoft was warned about the vulnerabilities in their system, knew they were being exploited, and are now doing damage control while their customers scramble to pick up the pieces from what has been dubbed the Great Email Robbery,” wrote Google senior vice president of Global Affairs, Kent Walker.

“So maybe it’s not surprising to see them dusting off the old diversionary Scroogled playbook.”

In 2012 Microsoft launched a ‘Scroogle’ campaign against the quickly rising competitor, targeting Google’s business models and data collection and processing.

Mr Walker pointed to Microsoft’s own platform businesses that offer news content, suggesting Microsoft had done relatively little to support journalism.

Do you know more? Contact James Riley via Email.

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