Google: Apple rejected Microsoft Bing deal over quality and advertising worries

Microsoft reportedly tried to sell Bing to Apple in 2018 – but failed.

The sale was unsuccessful because Apple had concerns about Bing’s search quality, advertising unit and monetization capabilities, according to a document in Google’s antitrust case against the U.S. Justice Department.

Google argues that the failed sale highlights that Bing lost out because it is an inferior search engine, not because Google has made the search market unfair for its competitors, per CNN.

Apple turns down Microsoft. Microsoft allegedly proposed either selling Bing to Apple or creating a Bing-joint venture together. Eddy Cue, Apple’s senior vice president of services, explained why Apple said no to Microsoft in the filing:

• “Microsoft search quality, their investment in search, everything was not significant at all. And so everything was lower. So the search quality itself wasn’t as good.”
• “They weren’t investing at any level comparable to Google or to what Microsoft could invest in. And their advertising organization and how they monetize was not very good either.”

What Google is saying. Google claims that Microsoft’s failed attempt to sell Bing to Apple demonstrates that Bing is an inferior search engine. Google wrote in the filing:

• “In each instance, Apple took a hard look at the relative quality of Bing versus Google and concluded that Google was the superior default choice for its Safari users. That is competition.”

Google also argues that Microsoft approached Apple multiple times – in 2009, 2013, 2015, 2016, 2018, and 2020 – proposing to make Bing the default search engine in Apple’s Safari web browser. However, Apple consistently rejected the idea, citing concerns about the quality of Bing’s performance.

What Microsoft is saying. Microsoft denies its attempts to sell Bing to Apple were due to quality issues – on the contrary, the tech giant claims the sale was blocked by Google. Microsoft’s CEO of Advertising and Web Services, Mikhail Parakhin, said he offered Apple more than 100% of the revenue or gross profit to make Bing its default search engine – but the proposal was rejected because of the Apple’s deal with Google.

Speaking at the federal antitrust trial, Parakhin alleged this was despite Microsoft offering to pay Apple more than Google – which he claims was offering in the region of 60%. He said:

• “We were just big enough to play but probably not big enough to win, if that makes sense.”

What the DOJ is saying. Google has a financial agreement in place with Apple to be the default search engine on its products at a cost of around $10 billion a year. In addition, Google pays Apple advertising revenue – which is one of the search engine’s biggest costs. The Justice Department asserted in its filing that Apple boss Cue testified:

• “If Apple did not receive the massive payments it sought from Google, Apple would have developed its own search engine,” the Justice Department asserted in its filing.”

Google could pay Apple as much as $19 billion this fiscal year, according to an estimate from Bernstein analyst Toni Sacconaghi. The DOJ claims these substantial sums of money are why Apple turned down a potential joint venture with Microsoft – not because Bing is inferior to Google.

Why we care. The U.S. Justice Department is suing Google, claiming it uses unfair tactics to maintain its position as the top search engine globally. If Google can demonstrate its search engine’s superiority, it might succeed in the case. However, if it loses, Google could lose its automatic default search engine status on common Apple products, posing a potential threat to its dominance in the search market.

Market share statistics. The U.S. Justice Department claims Google owns a 90% market share in search. On the other hand, Bing has 3% of the global market share, according to StatCounter.

Deep dive. Read our Google antitrust trial updates for everything you need to know.