The Six Five team dives into the legal truce that has ended between Microsoft and Google.
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Patrick Newman: Daniel let’s jump right in with the first topic. You may or may not have known this, but Google and Microsoft had a legal truce for six years, essentially a I won’t sue you and you won’t sue me and that recently ended.
Daniel Newman: Yeah, this is a big topic. It was one that I think caught a lot of people by surprise when the announcement came out that the truce had ended because frankly, there hasn’t been a lot of talk about the fact that this truce existed. Now, this initially took place early in the tenures of both Sundar Pichai, CEO of Google and Satya Nadella, CEO of Microsoft over the last several years. Both companies have seen a lot of growth, a lot of momentum. But here’s what everyone needs to know. You can read the news. And by the way, at Six Five we try to give a little news, a lot of analysis. The analysis on this one is big. We’re coming off of a week where five new antitrust bills were introduced into the House. We’re looking at platforms. We’re looking at breaking up the way companies favor their own products.
And we’re looking at essentially Google, Amazon, Apple and Facebook under the knife. And to some extent, Microsoft sort of sitting on the outside, looking in. But Microsoft is no stranger to massive regulatory battles. Around the turn of the millennium the company spent a number of years under intense scrutiny which forced it to completely rethink its business model and to be prepared for moments like this. The long and short early on in this particular engagement, that legal agreement between the two companies, they decided to focus more on positivity. Now this comes out after Microsoft had their Scroogled campaigns and lobbying going on. And in short, Pat, here’s kind of what I think people should really think about. One, the advertising space, Google just came out and basically announced they’re going to extend cookies into the longer-term future. Well, Microsoft just came out with Windows 11 its Edge browser which focuses on more privacy.
This is a key moment for the company to come out with a stronger privacy stance, and that potentially means they’re going to have to be somewhat critical of what’s going on at Google. Another thing that immediately came to my attention is Microsoft recently announced its intention to make side loading on its devices easier. Now, they’re not in the mobile OS space yet, but hold your horses. With Windows 11 ARM support got a lot bigger. You’re already seeing them come down market with smaller profile devices like the Duo and with all this ARM support on Windows and the fact that platforms are being challenged in this new antitrust era, is Microsoft potentially primed to come into this space and challenge in the mobile OS space again? We’ve seen it come we’ve seen it go. It hasn’t worked yet, but that wasn’t really under a Satya Nadella-led Microsoft, which has a ton of momentum.
And here are just a couple of things. But the last thing I’ll say, and Pat, I’ll try to leave a couple of thoughts for you to be able to jump in here. Is in this space in particular Google and Microsoft are challenging each other everywhere. And by the way, the optics of having some sort of alignment and not challenge each other in court just isn’t good optics right now, not in the middle of antitrust and regulatory over big tech. They’re challenging each other in workspace productivity, collaboration, cloud, advertising, social.
These two companies are neck and neck. And frankly, this is probably the one really interesting and odd anomaly I said is in some ways the two companies challenging each other is good for the regulatory because showing competition, showing that there is no collusion or alliance of any type between these companies to not challenge each other means that’s just one more big competitor in the space. And when you’re trying to pass antitrust law, and you have four and five big companies all competing in for instance cloud, is it really non-competitive? And I would argue it is not. Pat.
Patrick Moorhead: Yeah. So you left a little bit of for me and I appreciate that. But, I think this has a lot to do with showing that these big companies can be competitive against each other. I know you had mentioned this, but I’ll put an exclamation point on that. When you have either public deals or secret deals with these large companies agreeing to do or not to do, I think the courts might construe that as very monopolistic. “Hey, you take this market; I’ll take that market. We’ll dominate everybody else and everything’s okay.”
The other thing, while this isn’t Microsoft and Google there’s Microsoft and Apple. Microsoft has been very, really … I did a lot of press interviews this week on that very topic, which was Apple, Microsoft really turning the screws down on Apple. And whether it’s Apple’s 30% store tariff versus Microsoft’s 0 to 15% tariff, I think it’s fascinating. Apple is impinging on the PC market with the new M1 chips and I’m waiting for them to make their price reduction to go from like an OPP to around 1000 to maybe 799 where they could really damage the Microsoft ecosystem. So, I’m with you. More competition is better.