Microsoft Considered Investing Billions In Apple To Compete With Google Search

(Bloomberg) -- Microsoft Corp. weighed investing multiple billions 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 search, a Microsoft vice president 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 gaining more share and revenue.

Microsoft 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 to Safari. Instead, Google wound up expanding its own deal with Apple to the products that had 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 had to lose 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.

(Adds details on deal, investment loss from first paragraph. An earlier version of the story corrected the spelling of Alphabet.)

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