By Jay Greene and Jack Nicas
One of technology's most heated rivalries officially is on
ice.
Microsoft Corp. and Alphabet Inc.'s Google settled numerous
disputes Friday, agreeing to end regulatory battles around the
globe. The truce was ordered by the companies' relatively new chief
executives, Satya Nadella of Microsoft and Sundar Pichai of Google,
who have a cordial relationship, unlike their predecessors,
according to people close to the companies.
"Our companies compete vigorously, but we want to do so on the
merits of our products, not in legal proceedings," said a Google
spokesperson. "As a result, following our patent agreement, we've
now agreed to withdraw regulatory complaints against one
another."
The entente was months in the making. Last September, the
companies agreed to dismiss nearly 20 patent-related lawsuits
between them. In a joint statement at the time, the companies said
they "anticipate working together in other areas in the future to
benefit our customers."
In November, Microsoft dropped out of FairSearch, a group of
technology companies that lobbied against Google's dominance.
FairSearch said it would continue without Microsoft's backing.
However, "FairSearch died when Microsoft left," one FairSearch
member said.
Last month, Microsoft left the Initiative for a Competitive
Online Marketplace, or Icomp, another European lobbying group that
targeted Google. Microsoft in December threatened to pull funding
from Icomp unless it refocused "on issues that do not concern
Google's dominance or anticompetitive practices," according to one
of the group's former members, the British comparison-shopping site
Foundem. Icomp members agreed. However, when Microsoft pressed the
group to withdraw its formal complaint against Google with European
regulators, Icomp members voted against the move and Microsoft
resigned, Foundem said.
Microsoft declined to comment on the specifics of Foundem's
timeline, but a spokesman confirmed the company left FairSearch and
Icomp.
Microsoft's shift can be traced to Mr. Nadella's start as CEO
two years ago. He has made a point of settling long-standing
disputes with competitors and dropping long-held institutional
biases against making products that work with rival technology such
as Apple Inc.'s mobile operating system iOS, Google's Android and
the Linux operating system.
Mr. Nadella extended the olive branch just as Google, too, was
changing leadership. Last August, it named Mr. Pichai as CEO. Both
Messrs. Nadella and Pichai are Indian immigrants; Mr. Nadella was
raised in Hyderabad and Mr. Pichai in Chennai.
Like Mr. Nadella, Mr. Pichai isn't prone to the sort of acrimony
that once seemed to define the corner offices of tech. A person
familiar said the two leaders speak fairly regularly.
The Google-Microsoft fight was a continuing sideshow in the era
when Google ascended as one of tech's most powerful companies as
Microsoft slid from that perch.
Microsoft fought back with lawsuits and complaints, successfully
lobbying European regulators to investigate Google on abuse of its
dominance in search and mobile. That effort led to formal charges
including one filed Wednesday by the EU that Google unfairly uses
its Android mobile operating system to bolster its position in
search.
When Google, in 2004, poached one of Microsoft's top engineers,
Mark Lucovsky, Microsoft's then-CEO Steve Ballmer threw a chair and
cursed Eric Schmidt, Google's CEO at the time, according to
documents made public in 2005. Mr. Ballmer at the time called the
description "a gross exaggeration" of the events.
Microsoft later enlisted Mark Penn, its chief strategy officer,
to come up with a campaign to tar Google. Mr. Penn, who advised
presidential bids by both Bill and Hillary Clinton, ginned up the "
Scroogled" anti-Google advertising campaign. The campaign included
merchandise like a Google-branded mug that read, "Keep calm while
we steal your data."
A year after Mr. Nadella became CEO, Mr. Penn left
Microsoft.
Meanwhile, Google had quietly approached regulators to complain
about the software company's practices in tit-for-tat escalations,
according to a person close to the company. Mr. Pichai wrote in a
blog post in 2009, when he was Google's vice president of product
management, that Google supported the EU's case that Microsoft
harmed competition by making its Internet Explorer the default Web
browser on Windows.
"Google believes that the browser market is still largely
uncompetitive...because Internet Explorer is tied to Microsoft's
dominant computer operating system, giving it an unfair advantage
over other browsers," Mr. Pichai wrote
Now Google finds itself defending against similar claims in the
EU over its practice of requiring makers of Android phones to
pre-install its search engine and browser. In addition to the
Android case, European regulators have charged Google with unfairly
favoring its shopping-comparison site in search results, and they
are investigating three other complaints that focus on advertising,
local search and web scraping.
--Natalia Drozdiak and Sam Schechner contributed to this
article.
Write to Jay Greene at Jay.Greene@wsj.com and Jack Nicas at
jack.nicas@wsj.com
(END) Dow Jones Newswires
April 22, 2016 18:28 ET (22:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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