Google and Microsoft are at it again, now over government software

The on-again, off-again battle between the two companies flared up again when Google commissioned a study on how much the U.S. government relies on Microsoft software.

Pair of boxing gloves

Google and Microsoft are in a long-running feud that has once again flared up in recent months.

Photo: Jens Tandler/EyeEm/Getty Images

According to a new report commissioned by Google, Microsoft has an overwhelming "share in the U.S. government office productivity software market," potentially leading to security risks for local, state and federal governments.

The five-page document, released Tuesday by a trade group that counts Google as a member, represents the latest escalation between the two companies in a long-running feud that has once again flared up in recent months.

The report found what its authors call a "monoculture," alleging that Microsoft controls about 85% of the market of tools for communicating and collaborating, with Google as the next most popular vendor. The study ascribes Microsoft's position to governments' preference for sticking with vendors they already use, rather than trying potentially better options.

The Google-commissioned report also claims that governments' emphasis on ease "creates potential concentration risk and security vulnerabilities."

Microsoft's position "creates a bullseye on the government for bad actors, thereby putting the government at a greater risk for a national security incident," said Matthew Schruers, president of the Computer & Communications Industry Association, the trade group that released the findings and joined in commissioning them.

CCIA is one of Microsoft's oldest antagonists. It was deeply critical of the 2001 antitrust settlement between the U.S. and Microsoft, and filed a complaint to the European Commission about Windows XP. In 2004, the group's then-president reportedly personally received nearly $10 million from an agreement between the company and the association to pull back from the clashes.

The report is reminiscent of the 1998 U.S. antitrust lawsuit against Microsoft, when the Justice Department found Microsoft's bundling of Internet Explorer and the Windows operating system to be anticompetitive. The research also echoes recent government procurement battles.

The report authors, for instance, hint Microsoft possesses "dominant market shares" and say the company bundles Office 365 and Microsoft Teams in large deals to take advantage of government inertia in procurement. That concern also echoes the corporate clashes over the Pentagon's defunct "JEDI" contract for cloud computing, which Microsoft won before the bid was canceled.

The Defense Department contract, which Google also briefly sought to win, demonstrated just how furiously companies are willing to compete for lucrative government clients who may not have the same flexibility as private-sector buyers to switch vendors or try new products. Microsoft and other companies, including Amazon, vying for government contracts often cite security as their main value proposition to the government.

Tensions between Google and Microsoft significantly predate JEDI and go all the way back to the Microsoft lawsuit, which the U.S. settled in 2001. People who worked at both companies say the suit allowed Google, which was founded the same year the suit began, to grow without being acquired or squashed by Microsoft.

The rivals sparred through much of the aughts and early 2010s, especially over internet search. The tactics included Microsoft's "Scroogled" campaign hitting Google over its privacy policies. Google, in turn, published evidence Bing was scraping Google search results.

The battles calmed significantly by 2016, although they never quite went away, before picking up again this year. Microsoft President Brad Smith in February endorsed an Australian measure, which Google fought, to give media properties more bargaining power against platforms. Smith then testified before the U.S. Congress that Google used journalistic content to keep users engaged while denying them meaningful opportunity to monetize those visits.

"When a company's success creates side effects that adversely impact a market and our society, the problem should not be ignored," Smith wrote in prepared testimony.

Google hit back, saying in a blog post that Microsoft's claims were incorrect and its motivation was "self-serving," especially as an attempt to distract the public following hacks of governments and businesses that used Microsoft's email services.

"They are reverting to their familiar playbook of attacking rivals and lobbying for regulations that benefit their own interests," wrote Google's vice president of global affairs, Kent Walker.

Microsoft, which is valued at more than $2 trillion, certainly has an immense impact on the market for business software, and it has gone largely unexamined in recent antitrust discussions as government enforcers focus instead on cases against Google and other tech giants. The U.S. suit against Google zeroes in on the company's purported actions to maintain the monopoly of its search engine, which competes with Microsoft's Bing.

Microsoft and Google have also recently clashed over the former's production of documents to Google in the suit. In its filings, Microsoft acknowledged it had more or less cooperated with the U.S. and state investigations into Google last year.


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