Apple considered buying Bing from Microsoft in 2018

Apple considered buying the Bing search engine or making a “multibillion dollar investment” in a joint venture with Microsoft in 2018, according to a transcript of testimony from Apple’s head of machine learning and former Google exec John Giannandrea that was recently unsealed.

At the time, Apple was considering using Bing instead of Google to return answers to some queries from Siri and to power other iPhone and Mac features, Giannandrea said. Google pays Apple as much as $19 billion per year to be the default search engine on Apple products, according to an estimate.

The deal with Microsoft wasn’t completed and Giannandrea said he believed Apple CEO Tim Cook told Microsoft it wasn’t going forward.

“Obviously, if we entered into a joint venture with Bing, it would have implications for the Google relationship,” Giannandrea said in his testimony last week, according to a transcript viewed by CNBC.

While discussing Apple’s deliberations on whether to buy or invest in Bing in 2018, Giannandrea cited an internal presentation made by Adrian Perica, Apple’s head of business development, where he outlined four scenarios for Apple and Microsoft: Grow Siri organically, collaborate on building a technology called “Knowledge Graph,’ co-own Bing, or acquire Bing.

Giannandrea’s testimony was taken as part of the Department of Justice’s antitrust case against Google, which is currently ongoing. The government wants to prove that Google has used licensing deals and other contracts to lock out search rivals and monopolize the market.

Testimony from DuckDuckGo CEO Gabriel Weinberg unsealed Wednesday suggested he thought Apple was serious about using the rival search engine for some default settings and that Apple’s contract with Google was an “obstacle” for DuckDuckGo.

Google denies it has violated antitrust law.

Much of the trial, which is expected to continue for weeks, has focused on Apple’s deal with Google to be the default search engine on Apple products. Apple executives have said they picked Google because it’s the best search engine, not primarily because of Google’s payments.

Giannandrea is Apple’s senior vice president in charge of machine learning and AI strategy, and since he joined Apple in 2018 he’s been in charge of improving features like the Siri voice assistant and Spotlight, the company’s device search feature. Before that, he worked on Search at Google.

Much of his testimony revolved around internal deliberations at Apple to improve Siri and Spotlight, both of which can funnel queries to Google when they don’t have a ready answer. The DOJ sought to show that Apple may have invested more heavily in its own search technology if it didn’t have a lucrative deal with Google.

Giannandrea said he didn’t think Apple had a “general” search engine because it does not have a search results page, but that it competes for queries through its Siri, Spotlight, and auto-complete “Suggestions” in the Safari browser, which can answer questions using Apple’s technology before sending the question to Google.

He said the company had not made a decision on whether to build its own general search engine, which would be an expensive undertaking.

Giannandrea added he believed that Cook had met with Microsoft CEO Satya Nadella in the summer of 2018, which kicked off internal talks about whether Apple should increase its partnership with Bing. He explained he and Apple’s head of business development, Adrian Perica, had two or three meetings with Microsoft that year, starting in August.

“I would say that there was an open discussion about whether we could do more together, and that included, my understanding was, potentially the option to acquire Bing from Microsoft,” Giannandrea said, according to the transcript.

Microsoft had also suggested that it might be willing to be “very flexible” with sharing revenue from its ads in the event of a partnership, Giannandrea said. The proposed revenue-share proportion is redacted in the transcript seen by CNBC.

“I think we had a series of meetings in response to this initial meeting with Microsoft to talk about advertising generally and what Apple’s strategy was there,” Giannandrea said.

He also mentioned that Cook had asked about revenue growth from the Google deal slowing down in August 2018, and he said that the primary driver of the revenue share with Google would be “the number of queries that were sent to Google.”

Microsoft was interested in Apple paying for improvements to the search engine, Giannandrea said, including expanding it to additional international markets.

“One of the four options we looked at was a joint venture where Apple would have presumably provided some resources and they would have done some of these projects,” Giannandrea said.

Giannandrea suggested several times during the testimony that he was somewhat skeptical of Bing’s pitch and whether it would be a dramatic improvement over Google. He sent an email to Cook in December 2018 explaining his reservations. He also compared Bing and Google search in 2021 to see the progress Microsoft had made and found Google was significantly better at mobile queries.

“I said, ‘Is it possible that we could build a parity product?’ Yes, it’s theoretically possible, but I didn’t see a path to a better search engine for Apple’s users at that time,” Giannandrea said.

He was also questioned about his work at Google, where he discussed Apple’s attempt to obtain closely-held search data from Google as part of their deal.

In one part of his testimony, he mentioned Apple’s current work on search technologies, noting that the company is investing more in crawling the web in order to power its work on language models, one of the trendiest kinds of artificial intelligence in the technology industry.

Representatives from Apple and Microsoft didn’t respond to requests for comment.