Why has Microsoft stopped being beastly to Google?

Analysis "You can't deprive a gangster of his gun" – Noel Coward

Microsoft CEO Satya Nadella sees things differently from his predecessor Steve Ballmer. And one of the first thing Nadella saw differently is Microsoft’s relationship to Google.

On assuming the hot seat, he couldn’t understand why Microsoft was obviously at war with Google. Microsoft was not just stabbing Google in the back – it was stabbing it in the front.

Former pollster and political marketing consultant Mark Penn had joined Microsoft in 2012 and under Ballmer, assumed the title Executive Vice President and Chief Strategy Officer. Attack ads are standard fare in political campaigns, and Penn saw an opportunity to attack Google’s basic value proposition: give people free stuff, then mine their data, and use it for commercial purposes.

Apple could taunt Microsoft for being square, but Microsoft would taunt Google for being creepy.

"Google goes through every Gmail that’s sent or received, looking for keywords so they can target Gmail users with paid ads. And there’s no way to opt out of this invasion of your privacy. Outlook.com is different – we don’t go through your email to sell ads," said one of the claims made in Microsoft's Scroogled ad campaign.

This wasn’t Nadella’s style: he had to define a new positive value proposition for Microsoft, to change the idea of what Microsoft meant in people’s minds.

Ballmer’s public antagonism was matched by private action. Behind the scenes, Microsoft was the main backer of FairSearch, the pro-competition industry group which argued in Brussels that Google had unfairly leveraged its monopoly position in search.

For Nadella, this made no sense. Microsoft needed Google’s co-operation in certain areas, and as it moved to the cloud, would also be harvesting personal data. The difference was that Microsoft didn’t define a digital fingerprint of an individual purely in commercial terms, as Google did. It didn’t have an advertising monster to feed. It would keep the data to itself.

Instead of trying to fight Google ditch-by-ditch, Microsoft would attempt something new: an ethical cloud company which had your back. This would become plain in two high profile cases in which Microsoft was battling not Google but the US state: the Dublin Warrant case, and a battle against what it sees as excessive anonymous personal data requests.

A gradual winding down of the offensive began last summer: with Penn leaving Microsoft in July. Instead of “Scroogling” Microsoft would embark on a new strategy of taking on the US government to try to win trust in cloud computing.

But Microsoft’s argument is this. The move to cloud computing has great consumer benefits, but it won’t (and shouldn’t) happen without the trust of the public and business users, with customers simply being bulldozed into accepting a new model. The cloud needs consent. This is a sharp but subtle distinction with Google, which portrays its own model of the future as inevitable, where resistance is futile.

From the autumn on, Microsoft focussed its legal resources on the battles against the US government. Now it’s dropped its antitrust complaints it can put all of its strength behind the new strategy.

Not everyone at Microsoft shared Penn's view. Why was it fair game for the industry, they wondered, to gang up on Microsoft, as it had in the 1990s, but not for anyone to gang up on Google? Google faced antitrust action in more than 80 countries, so it wasn’t as if Microsoft had fired the first shot.

In 2014 Microsoft won a case for greater transparency in data requests, in a case on FISA bulk data collection orders, winning the right to publish information.

It also opened up the issue of the USA’s access to the data of non-US citizens.

Microsoft’s Dublin data centre case – explained by its legal architect in that link – is challenging the right of the US government to access personal data of non-US citizens stored on non-US servers. Microsoft has refused to comply with a warrant served on its Dublin data centre and the case is being heard on the Second Circuit in New York.

“The Department of Justice does not need to wait for data to come to the United States to examine it,” he explained. “It can force countries to give it your data without disclosing that access to government, or complying with any European law,” Microsoft’s chief lawyer Brad Smith told us in January.

And that means almost everything: 82 per cent of Facebook’s global user base is served by Dublin.

Microsoft wants the archaic 1986 Stored Communications Act updated. To get a sense of just how archaic this is, note that it allows the US government to download email that hasn’t been read after 180 days. Why? Because when the act was written, client computers would pull down and delete email on a server; so email on a server that was older than 180 days was assumed to be a dormant account. Microsoft is trying to rally industry around a replacement, the LEADS act.

This month Microsoft sued the US government over the secrecy orders that accompany state requests for personal data. Sometimes these are necessary, Brad Smith argues, but they should be specific and surgical.

Secrecy in the way government operates is fundamentally unconstitutional, and shouldn’t be habitual, and not an open-ended clandestine fishing expedition.

It’s a smart strategy, because Microsoft is massively outgunned when it comes to matching Google’s lobbying muscle. Google sponsors more than 150 think tanks and academic departments, including think tanks such as the New America Foundation. It also funds NGOs such as the Electronic Frontier Foundation, which received money from a Google privacy settlement and showed its gratitude by giving Google top marks for data privacy.

And then there’s soft power. Google increasingly funds the media, with the Financial Times and The Guardian taking substantial donations for “digital innovations”; Google sponsors wonkish news site Politico.eu's email newsletter, The Playbook, and the website today declared that Google would emerge triumphant over the European Commission’s misguided attempt to impose competition law.

The political class entrusts Google to regulate the internet the way Google sees fit; Google employees now run the nominally independent USPTO and FCC.

Against all this, it’s futile to fight head on – unless you want to replay the Charge of the Light Brigade. A trusted Microsoft is the goal here, and it too needs personal data to feed its AI algorithms.®

Bootnote

Readers may well applaud the focus on the brave strategy of litigating to gain the user's trust – but wonder why Microsoft's continues to use aggressive malware techniques to persuade us to upgrade to Windows 10. Good question. Some consistency here would be welcome, Redmond. ®