Microsoft Corp (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) Google have ended an almost six-year treaty to prevent open warfare between the rival Big Tech companies, the Financial Times reported.
What Happened: The move comes amid growing global regulatory scrutiny over anti-competitive practices. The software and internet search firms reached the pact 2015 soon after Satya Nadella and Sundar Pichai assumed their offices in the firms.
However, the companies did not renew the pact in April. The decision coincided with growing regulatory scrutiny against the Big Techs’ practices that drove their strong foundation and eliminated more open competition.
They had settled outstanding lawsuits and agreed not to prosecute or complain about each other to regulators without first trying to resolve disagreements at the highest level internally under the pact. It also sought to bring closer co-operation in mutual business interest areas. However, competition lingered in the cloud computing and online productivity applications markets.
Microsoft allegedly ran a series of attack ads called “Scroogled” that accused Google of employing techniques to boost its profits by “screwing” its users.
Microsoft President Brad Smith chastised Google for threatening to withdraw its search service in Australia following the new content legislation, including in March Congress testimony.
Smith also accused Google of ignoring Microsoft’s pleas regarding rendering its dominant digital advertising services interoperable with other companies.
Why It Matters: Microsoft’s willingness to turn its fire away from Google coincided with the growing regulatory probe on the search company’s business practices. Interestingly, Microsoft has not featured in the Big Tech groups’ antitrust investigations despite becoming only the second tech company, after Apple Inc (NASDAQ: AAPL) to be valued at over $2 trillion last week.
However, the association helped Microsoft find ways to run mobile apps built for Google’s Android operating system on Windows personal computers.
Price action: MSFT shares traded lower by 0.40% at $270.31, and GOOG shares traded lower by 0.42% at $2,509.77 on the last check Wednesday.
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