Google and Microsoft End Five-Year Truce

Microsoft and Google have decided to stop playing nice. The two tech giants recently ended a years-long truce during which they agreed not to aim their substantial lobbying firepower against each other.

With regulators around the world threatening to impose limits on the power of the biggest technology companies, the two rivals — which compete in web search, cloud computing and artificial intelligence — are now free to step up behind-the-scenes lobbying efforts and public complaints against one another.

The old non-aggression pact, forged at the time by two new CEOs wanting a fresh start on a formerly acrimonious relationship, had already been fraying before it lapsed in April.

The companies feuded publicly over a proposal to force Google to pay news publishers for content and squabbled more quietly over technology for selling search ads.

Neither company is eager to extend or renew the alliance, according to people familiar with each companies’ thinking, who weren’t authorized to discuss confidential relationships.

From Microsoft Corp.’s side, the disputes are about giving marketers equal access to search engines when they organize campaigns with Google’s technology, and creating a robust ecosystem for content creators to get paid.

Google, a unit of Alphabet Inc., believes Microsoft is objecting because it regards Google as a threat to Microsoft’s Azure cloud-computing and Office productivity businesses.

At a time when regulators are training their guns on the whole industry, Microsoft and Google handing them ammo against each other may backfire, leaving both companies and their peers subject to even more scrutiny.

The first signs of strain between the two companies appeared more than two years ago, when Microsoft protested to Google that its Search Ads 360, which lets marketers manage advertising campaigns across multiple search engines, wasn’t keeping up with new features and ad types in Microsoft’s search engine, Bing.

That meant it was easier and better for potential advertisers using that system to buy Google spots than Microsoft ones. It seemed to be happening when Bing’s capabilities caught up with an existing Google search feature, said Rik van der Kooi, vice president of Microsoft Advertising. He estimates Google’s moves in ad tech are costing the software maker hundreds of millions in ad revenue every year. It impacts Bing as well as the Yahoo and DuckDuckGo search engines that use Bing technology.

By last year, Microsoft had spoken with U.K. officials and regulators in some U.S. states about the ad-tech issue. A 2020 report about Google by the U.K.’s competition authority states that Microsoft expressed concerns that Google doesn’t update its SA360 technology with Bing’s latest features, which reduces the amount of money advertisers spend on Bing.

Microsoft also said that Google provides quicker bid information to book ads on its website than on Bing. The U.K. conversations were in response to questions put to Microsoft, which was allowed in the agreement with Google, said a person familiar with the matter.