Steve Ballmer, chief executive officer of Microsoft Corporation (NASDAQ:MSFT) said it is difficult to compete and gain profit in the consumer cloud services business because the market is monopolized by Google Inc (NASDAQ:GOOG). He said the government should investigate its search practices.
Steve Ballmer on Google’s monopoly
“Google Inc (NASDAQ:GOOG) does it. They have, dare I say, a monopoly. We are the only company on the planet still trying to compete with it,” said Ballmer during the company’s analyst conference in Bellevue, Washington.
During the event, Ballmer noted that a small number of companies expanded by offering cloud services to consumers and few up-and-comers such as Facebook Inc (NASDAQ:FB).
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Ballmer emphasized that the search is a scale game because the market for advertising is auction-based economics. According to him, if Microsoft Corporation (NASDAQ:MSFT) has exactly the same quality of algorithms, but less scale in search advertising, its revenue is less than Google Inc (NASDAQ:GOOG). He pointed out that the search engine giant has more money to pay for distribution on Apple Inc (NASDAQ:AAPL) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930).
“Rumor is they pay each $1 to $3 billion a year for distributing their search products. We have to generate volume to step up,” said Ballmer.
Microsoft’s discussion of Google search practices
According to him, the management of Microsoft Corporation (NASDAQ:MSFT) discussed the search practices of Google Inc (NASDAQ:GOOG) and highlighted its bad practices in advertising with competition authorities. Ballmer identified Google’s bundling of YouTube and Google Maps as an example of bad practice.
Ballmer said, “I believe that Google’s practices are worthy of discussion with competition authority. And, we have certainly discuss them with competition authorities. I don’t think their practices are getting less merit tortuous of discussion. I think they need pressure from competition. I think they need pressure in the marketplace with product, with investment, with scale.”
According to him, Microsoft Corporation (NASDAQ:MSFT) will get scale with its own devices or with a close partner.
Google facing antitrust investigation
Google Inc (NASDAQ:GOOG) is currently facing an antitrust investigation from the European Commission on allegations that it was using its dominance to block its competitors, including Microsoft Corporation (NASDAQ:MSFT) in the search market in Europe. The search engine giant recently offered additional compromises to settle the case without paying a penalty.
Julie Bort of Business Insider noted one interesting event in the history of Microsoft Corporation (NASDAQ:MSFT) wherein the company was under investigation in the United States for decades. The Department of Justice (DOJ) found that Microsoft was a monopoly and violated antitrust law by bundling Internet Explorer with Windows.
Bort wrote, “That’s rich and ironic coming from Ballmer.”