(Bloomberg) -- Microsoft Corp. weighed investing multiple billions of dollars in a deal with Apple Inc. in 2016 to make its Bing search engine the default on the Safari browser and better compete with Alphabet Inc.’s dominant Google, a Microsoft executive testified Thursday in court.
Microsoft Chief Executive Officer Satya Nadella met with Apple CEO Tim Cook as part of the talks, said Jon Tinter, a Microsoft business development vice president who is on the stand during the US Justice Department’s antitrust trial in Washington against Alphabet. Microsoft would have taken a multi-billion dollar loss on the terms of the deal, Tinter said, but it would have bolstered Bing, eventually allowing it to gain more market share and revenue.
The software giant had secured a deal for Apple to use Bing in Siri and Spotlight, an Apple feature to help find apps on iPhones from 2013 to 2017, but wanted to expand that to Safari. Instead, Google wound up bolstering its own deal with Apple to include the products that had previously used Bing.
This kind of search engine deal involves Microsoft or Google sharing with Apple revenue from ads linked to user queries. Because Bing was far smaller than Google, Microsoft would have had to offer Apple a far larger percentage of the revenue than Google and would have lost money on the deal, at least initially, Tinter said.
“In the short term it would have been highly negative. We told the board that we are thinking about making a multi-billion negative investment to support this,” Tinter said.
The terms were negative enough that Microsoft executives discussed with the board how to explain it to shareholders, he said.
In 2018, Microsoft and Apple again had serious discussions about teaming up on search outside the US. Microsoft developed a “playbook” for the investments it would make to improve its search, Tinter said.
“It was all around trying to make them confident that we could make the switch,” he said.
Samsung Defaults
Microsoft also tried to persuade Samsung Electronics Co. to use its Bing search engine as the default on its smartphones, Tinter said.
“Even if the economics were superior in working with Microsoft, they would not move off Google,” Tinter said of Samsung.
In a Dec. 15, 2019 email shown in court, Tinter urged Nadella to stop pushing Samsung’s then-president, Dong-Jin Koh, known as DJ, to switch the search default.
“I have gotten some pretty candid feedback from the Samsung team that DJ has clearly heard your desire to do something here, but they don’t want to make a big move because of the partnership with Google but DJ is too polite to say no,” Tinter wrote.
Tinter said that for years, he urged the Samsung executives to at least allow Microsoft to make a bid for the search default on its phones, pointing to the Apple example.
Even though “we weren’t winning, we were helping Apple win more money and costing Google more money,” Tinter said. But the Samsung executives said “Jon, it’s not even worth it. We don’t want to go down this path.”
