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The Microsoft-Google Truce

May 9th, 2016

Many have been puzzled by Microsoft’s recent agreement with Google to cease all legal and regulatory hostilities at a time when it seems that Google has more to gain from this unlikely entente than Microsoft. While details of the agreement have not been disclosed, it appears to prohibit either company from instigating, participating in, or even commenting on the legal or regulatory disputes of the other.

Microsoft’s 28 April Blog post[1] might provide a clue to Microsoft’s motivation. It reveals that a recent Windows 10 update closed the loopholes that had allowed its Cortana digital assistant to use non-Microsoft browsers and search engines. But doesn’t this bear an eerie resemblance to the anti-competitive practices at the core of both Microsoft’s and Google’s antitrust woes with European and US regulators?

Windows 10 represents a dramatic shift in Microsoft’s business model. It is Microsoft’s first multi-platform operating system, its first to be given away as a free upgrade, and its first to require users to allow Microsoft to push updates without further consent. Given that Microsoft expects Windows 10 to be installed on more than a billion active devices within the next two years[2], surely any move that ties its integrated Cortana assistant to its own search engine and browser risks inviting accusations of anti-competitive leveraging from Bing and Edge’s rivals? You know, rivals such as Google, and…well…Google.

So what has Google had to say about the recent Windows 10 update? When asked by the Wall Street Journal, “Google declined to comment”[3]. The penny drops?

Given that Microsoft’s withdrawal from the various investigations into Google’s anti-competitive conduct is unlikely to have any material impact on their outcome, particularly at this late stage, is it possible that Microsoft has more to gain from this pact than we, or even Google, first realised?

[1] https://blogs.windows.com/windowsexperience/2016/04/28/delivering-personalized-search-experiences-in-windows-10-through-cortana/

[2] http://www.zdnet.com/article/microsoft-windows-10-will-be-on-1-billion-devices-in-two-to-three-years/

[3] http://www.wsj.com/articles/the-digital-assistant-cortana-has-a-one-track-mind-microsoft-1461968974

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