Google Failed To Show Effective “Competition For The Contract”

X. GOOGLE’S PRO-COMPETITIVE JUSTIFICATIONS LACK FACTUAL SUPPORT AND DO NOT OUTWEIGH HARMS IN RELEVANT MARKETS

1230. Google has identified purported procompetitive benefits that result from its distribution agreements with Apple, Android OEMs, U.S. carriers, and third-party browser companies. Those benefits are largely illusory, as Google has failed to substantiate them beyond conjecture from abstract principles of economics. Infra ¶¶ 1231–1248 (§ X.A.1), 1310–1344 (§ X.C).

Even if there was evidence of those procompetitive effects, Google has not shown that they justify harms to consumers in the general search services or advertising markets. Infra ¶¶ 1297–1309 (§ X.B.2), 1310–1344 (§ X.C).

A. Google Failed To Show Effective “Competition For The Contract”

1. “Competition For The Contract” Would Not Prevent Competitive Harms Even If It Existed

1231. “Competition for the contract,” even if it existed, would not cure the anticompetitive harms caused by Google’s search distribution deals because (1) dominant firms and distributors can find it worthwhile to enter contracts that harm competition; (2) dominant firms are able to use monopoly profits when bidding for exclusive contracts; and (3) competition for exclusives can make competition less intense where there is a dominant firm. UPXD106 at 25; Tr. 10513:21–10527:11 (Whinston (Pls. Expert)); Tr. 9768:23–9774:3 (Murphy (Def. Expert)) (describing Google’s competition for the contract argument); id. 10112:7–16 (agreeing that the existence of multiple bidders for a contract does not always create competition that resolves exclusionary concerns).

a) Dominant Firms And Distributors Do Not Always Act In Search Consumers’ Best Interests

1232. Individual market participants benefit from competition but can make short-term decisions that can harm competition in the long term. Tr. 10513:21–10516:1 (Whinston (Pls. Expert)) (explaining how competition is a public good).

1233. Search distributors, such as OEMs and carriers, benefit from competition in the market for general search services because search providers competing to distribute their products will bid up prices or offer better deal terms, including higher revenue shares. Infra ¶¶ 1298–1299.

1234. At the same time, distributors do not always act consistent with the public’s interests. Tr. 10516:17–10517:25 (Whinston (Pls. Expert)). Distributors care about their profits and seek to maximize them. To do so, they cater to consumers who use their products and whose business they need to attract and maintain, but not consumers who do not buy or use their products or browsers. Id. 10513:21–10516:1. Search distributors’ interests are particularly illaligned with advertisers; the more advertisers pay for Search Ads and Text Ads, the more money distributors make through their revenue shares. Id. 10516:2–25.

1235. Even if a single distributor wanted to try to promote more competition in the marketplace, the relatively small size of most distributors combined with Google’s dominant position means that any action it takes would harm the distributor but have a limited effect on competition. Tr. 10518:2–10519:2 (Whinston (Pls. Expert)). As a result, distributors may be incentivized to contract with Google even if the distributor would be better off with more search competition. Id.

1236. Unlike consumers, dominant firms, such as Google, benefit from less competition. Instead, they benefit from less competition because it allows them to charge higher prices and earn monopoly profits. Tr. 10513:21–10516:1 (Whinston (Pls. Expert)) (describing dominant firms’ attitudes toward competition); id. 10519:15–10521:22 (before the introduction of meaningful competition, monopolists enjoy monopoly profits).

1237. Because neither search distributors nor dominant firms, like Google, account for preserving competition across the general search services market, there is room for a mutually beneficial distribution deal that harms competition. Tr. 10519:15–10521:22, 10517:2–25 (Whinston (Pls. Expert)). Put differently, a dominant firm who benefits from reduced competition will find it worthwhile to pay a distributor to agree to terms that reduce competition. Id. 10517:2–25.

1238. Apple is illustrative. It is a profit maximizing firm, and its interests are not always aligned with those of its users (and certainly are not always aligned with the interests of rivalsmartphone users). Tr. 10035:24–10036:8 (Murphy (Def. Expert)). In making decisions about search, Apple seeks to satisfy its customers while maximizing the money it receives under its ISA. Tr. 2463:15–18, 2464:8–2465:7 (Cue (Apple)) (In negotiating the ISA with Google, under which Google paid Apple $20 billion in 2022, the “economics was an important part.”); Tr. 10658:24–10559:7 (Whinston (Pls. Expert)) (Distributors such as Apple have different and sometimes divergent interests from consumers.); Infra ¶¶ 1298–1299.

1239. Apple has repeatedly taken actions that were in its own interest, but not its customers’. For instance, in 2013, Apple—an e-Book distributor—was found liable for violating the antitrust laws for conspiring with book publishers to change the pricing model for e-books, resulting in a retail price increase for Apple customers, among others. Tr. 10037:4–15 (Murphy (Def. Expert)) (“[P]resumably Apple’s customers would prefer lower prices” on e-books.).

1240. Even a public-interest minded distributor may take actions that harm competition. Mozilla is a nonprofit dedicated to maintaining the internet as an open and accessible public resource by advocating for user choice, privacy, security, open source, and interoperability. Des. Tr. 20:16–21:14 (Baker (Mozilla) Dep.).

One reason Mozilla chose to set Yahoo as the default for Firefox in 2014 was to promote competition, reasoning that building up a Google competitor would be in Mozilla’s and other distributors’ shared interest. UPX0315 at .005 (“Does not promote competition for search” and “Supports the continued dominance of Google” were reasons to discontinue Google search distribution partnership); UPX0107 at -358 (Mozilla backers of decision to move default to Yahoo “excited about the disruptive opportunity”); UPX1070 at -313 (“In the right setting, Mozilla can have a significant impact on the direction of innovation”).

But Mozilla represents a small share of the total search market, and its search traffic alone cannot guarantee there are strong competitors in the market. Tr. 10518:2–10519:2 (Whinston (Pls. Expert)).

1241. As the largest recipient of Google’s revenue share payments, Apple has more of an incentive to promote competition than smaller distributors and, with the significant share of searches being conducted on its devices, a greater ability to affect competition. Tr. 10519:3–12 (Whinston (Pls. Expert)). However, even Apple only represents half the smartphone market and cannot guarantee robust competition; Apple is still affected by choices made by firms in the market. Id.

b) Google Can Use Monopoly Profits To Outbid Rivals

1242. “Competition for the contract” would also not be expected to meaningfully check Google’s monopoly power because competition for exclusive contracts favors dominant firms. Tr. 10519:15–10521:22 (Whinston (Pls. Expert). In a competitive marketplace, a dominant firm’s profits will fall to a competitive level because competition tends to drive down profits for all firms in a market as they compete for business on price and quality. Id.

1243. Prior to the introduction of meaningful competition, a dominant firm enjoys monopoly profits due to its ability to charge above-market rate prices. Its rivals do not. Tr. 10519:15–10521:22 (Whinston (Pls. Expert)). Google, as a dominant firm, has a structural incentive then to use its monopoly profits—which competitors do not earn—to prevent the emergence of competitive conditions. Google, so long as it remains dominant, will always outbid its rivals (who are bidding to win competitive profits) for exclusive contracts to maintain Google’s share position. Id.

1244. Google’s search rivals recognize this dynamic. As Mr. Nadella observed, “[r]ight now there is basically [a] status quo,” with Google, “the dominant player in search . . . paying a lot of money to maintain [its] share position.” Tr. 3503:22–3504:17 (Nadella (Microsoft)).

c) Competition For Exclusives Can Make Competition Less Intense

1245. Finally, winner-take-all competition is weak in industries dominated by a single firm because that firm will always win. Tr. 10522:2–10526:1 (Whinston (Pls. Expert)). Given Google’s insistence on only paying for default exclusivity, competition for distribution is currently an all-or-nothing contest. UPX0072 at -216. Google’s distribution contracts ensure there is one winner and that winner serves as the search provider on every search access point on a device or browser. For a dominant firm to beat a rival, it only needs to be better on average than a rival for all different uses and consumers across every search access point. Tr. 10522:2– 10526:1 (Whinston (Pls. Expert)).

1246. The all-or-nothing contest softens smaller and specialized rivals’ incentive to compete across the board by preventing them from just competing for those queries in which they are most competitive. Tr. 10522:2–10526:1 (Whinston (Pls. Expert)).

1247. For example, a privacy-focused search engine like DuckDuckGo has little chance of outbidding Google to be the sole exclusive default on Apple devices because DuckDuckGo is ill-equipped to compete against Google for every query. Tr. 10522:2–10526:1 (Whinston (Pls. Expert)). DuckDuckGo is far more competitive against Google when competing just for users searching in private browsing mode.

If DuckDuckGo were able to compete to be the default only for those searches, it would have a greater chance of success because it would not be forced to compete for queries that are outside its specialty. Id. Competition could then be further enhanced as DuckDuckGo took advantage of scale economies to improve its product and broader competitiveness against Google. Id.; Tr. 9716:5–9718:12 (Murphy (Def. Expert)) (“I don’t see DuckDuckGo as a default competitive competitor because they’re more of a niche player.”).

1248. Many if not most of Google’s other search rivals also would compete more effectively for incremental searches if given the chance. Tr. 10522:2–10526:1 (Whinston (Pls. Expert). For example, Microsoft is better positioned to compete for distribution in the United States than in other countries. It is also better positioned to compete for distribution on desktop computers than on mobile devices. UPX0260 at -681 (Apple study finding that, for desktop queries in the U.S., Bing ties Google in result relevance and outperforms Google in overall user preference).

But because Google insists on being set as the exclusive default on all devices in nearly all countries, Microsoft cannot reach a targeted deal. Tr. 3137:21–3139:2 (Tinter (Microsoft)) (Based on Microsoft’s modeling, “[t]he optimal thing for Apple to have done” would have been to switch to Bing in the United States and stay with Google for the rest of the world, but “because of . . . their relationship dynamics with Google, they couldn’t do that.”).

Therefore, the only option available to Microsoft is to attempt to outbid Google for a global, exclusive deal, which it has been unable to do. Infra ¶¶ 1263–1278 (discussing Microsoft’s inability to defeat Google for an all-or-nothing deal for the Safari default); Tr. 2478:24–2479:3 (Cue (Apple)) (ISA terms apply to all Apple devices with a browser, so Apple cannot choose different search providers for iPhones and Mac computers); id. 2478:2–8 (ISA does not have a carveout for the United States, so Apple cannot choose different search providers for the United States and international markets).

2. There Has Been No Meaningful “Competition For The Contract” For Over A Decade

1249. There is no evidence of meaningful competition in the general search services market. To the contrary, the record indicates that only minimal competition has existed over a decade. Tr. 1603:9–14 (Roszak (Google)) (recalling no other time in his tenure, besides the Mozilla Firefox episode in 2014, when Google lost a bid for a search default in the United States).

1250. Given the lack of strong GSE rivals for Google, minimal competition exists for default agreements in the United States today. Tr. 2464:8–2465:7 (Cue (Apple)) (there was no valid alternative general search provider to Google when Apple was negotiating ISA renewal in 2016)); Tr. 7772:12–7773:10 (Pichai (Google)) (Google was aware it was the only viable option for Apple and leveraged this fact in 2016 negotiations); Tr. 3503:22–3504:17 (Nadella (Microsoft)) (“Right now, there is basically status quo, right; the dominant player in search is paying a lot of money to maintain that share position.”); Tr. 10519:15–10521:22 (Whinston (Pls. Expert)) (competition for the exclusive contracts favors the monopolist).

1251. Rival distributors face significant disadvantages relative to Google with respect to their quality and ability to monetize search queries. Supra ¶¶ 559–562. As a result of these disadvantages, those rivals cannot win default distribution deals even when they offer distributors 100% or more of the revenue they earn on devices. Tr. 3503:22–3504:17 (Nadella (Microsoft)) (Microsoft prepared to incur billions of dollars in losses to secure the search default deal with Apple); Tr. 3137:8–3137:20 (Tinter (Microsoft)) (Microsoft willing to make a “multibillion-dollar negative investment” to secure the Apple default); UPX0105 at -710.002 (Bing offered [redacted]% profit share in bid for Mozilla Firefox default, compared to Google’s offer of [redacted]% to [redacted]%).

1252. Distributors do not view DuckDuckGo or other small GSEs as viable alternatives to Google when negotiating an all-or-nothing deal. Tr. 2540:9–14 (Cue (Apple)) (Bing and DuckDuckGo were not viable options for Apple, and Apple did not consider any other alternatives.); Des. Tr. 263:11–264:6 (Giard (T-Mobile) Dep.) (T-Mobile dismissed DuckDuckGo early on a possible default search provider for T-Mobile’s Android devices.); Des. Tr. 240:15–241:4 (Ezell (AT&T) Dep.) (in considering Google RSA renewals, AT&T considered Bing “really the only company that fit [the] criteria” for a “a general web Internet search capability comparable to Google”).

1253. Google typically does not consider actual or potential bids from rival GSEs when determining how much it is willing to pay its distribution partners in exchange for defaults. UPX6024 at -443 (written 30(b)(6) response: “Google typically has not used the amount of an actual or estimated competing bid in determining how much it was willing to pay for its revenue share agreements with Apple, Mozilla, Samsung, AT&T, Verizon, T-Mobile, and Sprint.”).

1254. On Android, no rival search engine has won a “competition” against Google to be set as default in the United States in over a decade. Tr. 3114:10–13 (Tinter (Microsoft)) (in the last decade, Microsoft has not gained any distribution on Android devices); id. 3237:8–3238:17 (Samsung not willing to enter into a partnership with Microsoft for the “big entry points,” such as “the browser, the widget, the preinstalled search app,” because “they were managing the Google relationship”); Tr. 1087:16–20 (Higgins (Verizon)) (Verizon did not preload any rival search engines on Android devices); Tr. 3691:18–3692:12 (Ramaswamy (Neeva)) (“very, very hard” for Android distributors to “really offer Neeva even as an option—not the default search, but as a default search option on their phones”).

1255. In fact, when their default distribution contracts with Google are up for renewal, Android OEMs and carriers do not even seek bids from rival search engines or negotiate with anyone other than Google. Tr. 1117:6–14 (Higgins) (Verizon)) (Verizon did not solicit bids from Microsoft or DuckDuckGo when negotiating its renewal with Google); Des. Tr. 237:20–238:8 (Ezell (AT&T) Dep.) (AT&T did not solicit bids or initiate discussions with Microsoft in connection with the Google negotiations.); Des. Tr. 201:17–20 (Baxter (Samsung) Dep.) (no recollection of Samsung ever receiving meaningful proposal from Microsoft to preload Bing on any Samsung Android mobile phones in the U.S.); Tr. 10155:21–25 (Murphy (Def. Expert)) (no evidence that Android OEMs put their search defaults out for bids when their contracts come up); id. 10156:15–19 (no evidence that Android OEMs negotiate search defaults with any party other than Google); id. 10157:25–10158:6 (no evidence that Google’s default agreements with Android OEMs are intensely competed over).

1256. Even if there was evidence of meaningful competition for search defaults, there are less restrictive alternatives than using exclusive defaults to promote competition, including competing directly for users through product quality or other incentives. Tr. 6462:2–15, 6462:23–6464:1 (Nayak (Google)) (Google implemented a project to decrease latency in 2017 in response to tests showing Bing returns results faster than Google); Tr. 8269:5–8272:7 (Reid (Google)) (Google rushed to launch AI products in response to Bing Chat).

a) Yahoo’s Bid To Be The Firefox Default

1257. The most recent example of a rival successfully outbidding Google for default distribution on a browser or smartphone in the United States came in 2014, when Mozilla changed the Firefox default to Yahoo. But that episode illustrates why rivals have not wrested a single default away from Google since. Supra ¶¶ 1063–1065.

1258. In 2014, Mozilla changed the default GSE in Firefox from Google to Yahoo. Des. Tr. 69:22–70:3 (Baker (Mozilla)) Dep.). Mozilla was motivated by its recognition that relying on Google “[d]oes not promote competition in search,” “supports the continued dominance of Google,” and fosters Mozilla’s “dependency on Google.” UPX0315 at .005; Des. Tr. 271:8–11, 271:14–272:2 (Baker (Mozilla)) Dep.) (“Competition in [the] search market would help us. . . . There aren’t many alternatives.”). Mozilla believed that reaching a deal with Yahoo would give Mozilla “independence from Google” and could be an “[o]pportunity to level the playing field in search.” UPX0315 at .006.

1259. To win the Firefox search default in 2014, Yahoo substantially outbid both Google and Bing (despite Bing offering a 100% revenue share). Des. Tr. 200:14–22 (Baker (Mozilla) Dep.) (Before the 2014 default switch to Yahoo, Google was paying Mozilla roughly $275 million a year, on a flat-fee basis, for the Firefox default.); UPX0107 at -092 (Yahoo offered $375 million-a-year guarantee, versus Google’s [redacted]% revenue share offer valued at $[redacted] million.); UPX0105 at .007 (Bing’s [redacted]% revenue share offer valued at $[redacted] million in first year, falling below $[redacted] million in subsequent years.).

1260. Prior to installing Yahoo as its default search engine in late 2014, Firefox’s market share—which comes almost entirely from desktop computers—had been declining sharply for several years. Tr. 10073:4–10074:14 (Murphy (Def. Expert)) (There was no detectable increase in the pace of Firefox losses when the default switched to Yahoo.); UPX0851 at -401 (showing Firefox's declining market share from 2010 to 2014); id. at -402 (showing Firefox's de minimus market share on mobile phones).

1261. After winning the Firefox default, Yahoo responded to the resulting financial pressure by loading the search page with ads, which degraded the user experience. Des. Tr. 236:24-237:13 (Baker (Mozilla) Dep.) (after becoming the Firefox default, Yahoo began to insert too many ads on the search page, resulting in a bad user experience); id. 237:18–24, 239:2-12 (discussing UPX0898 and Mozilla's concern that Yahoo was under pressure to increase short-term revenues by increasing ads to the SERP); UPX0898 at -467 ("The Yahoo team has been under continual pressure to increase monetization of the SERP" and describing various increases in ad density on the Yahoo search page). By 2017, Yahoo no longer represented a viable option for Mozilla, and Mozilla returned to Google. Des. Tr. 79:2–14, 271:18-272:2 (Baker (Mozilla)) Dep.).

1262. Since 2014, no rival search engine has won default distribution on any browser or smartphone in the United States in a "competition for the contract" against Google. Tr. 1603:9– 14 (Roszak (Google)) (recalling no other time in his tenure, besides the Mozilla Firefox episode in 2014, when Google lost a bid for a search default in the United States).

b) Microsoft’s Failed Efforts To Compete For The Safari Default

1263. Microsoft's inability to compete against Google for the Safari default illustrates the lack of meaningful competition that exists for search distribution agreements.

1264. In 2015, Microsoft approached Apple about the possibility of a search partnership. Tr. 2508:7-12 (Cue (Apple)). Microsoft informed Apple that Microsoft was "willing to provide Apple with the majority of profits” and “willing to provide Apple with the tools to enable a more private search experience that is consistent with the broader Apple value proposition.” UPX0614 at -112; UPX0613 at -110 (Cook (Apple) circulating Microsoft’s proposal within Apple); supra ¶¶ 1063–1065 (discussing Microsoft’s message to Apple on the scale benefits of a deal). Microsoft initially offered to pay Apple 90% revenue share in exchange for setting Bing as the default GSE on Safari. UPX0614 at -113–14. Microsoft estimated that its revenue share payments would total approximately $[redacted] billion over the next five years. UPX0614 at -114.

1265. After receiving Microsoft’s proposal, Apple analyzed the financial and quality aspects of how a deal with Microsoft would compare to Apple’s existing deal with Google. Tr. 2514:6–25 (Cue (Apple)) (Apple “did a lot of analysis.”). Microsoft faced a major disadvantage in its ability to monetize because Microsoft lacks scale, particularly on mobile, and because Google can generate monopoly profits. Supra ¶¶ 984–1014 (§ VIII.A.2), 1231–1240 (§ X.A.1.a). Apple expected to receive approximately $[redacted] billion in payments from Google under the ISA over the next five years and $[redacted] billion over the following five years. UPX0273 at -974. Apple found that, “[c]learly, Microsoft can’t commit to these numbers or even anything close to them.” Id

1266. Google’s own findings confirmed Apple’s analysis; Google found that Microsoft would need to offer Apple a 122% revenue share rate just to match Google’s payments at a 33.75% revenue share. UPX0674 at -914; Tr. 1684:17–23, 1685:7–1687:7 (Roszak (Google)). Google named this project “Alice in Wonderland”—in which “Alice” was the codeword for Microsoft—after a dream sequence. Id. 1678:5–20, 1690:5–9. As Microsoft got “desperate,” it offered Apple a 100% revenue share rate. Tr. 2511:12–21 (Cue (Apple)). But even at a 100% revenue share rate, Microsoft “couldn’t come close” to Google’s expected payments to Apple. Id. 2512:6–19.

1267. Mr. Cook asked Apple’s leadership team whether they believed there was “a guarantee level that would protect us and make it impossible for [Microsoft] to walk [away] while not being reckless [for] them to agree.” UPX0273 at -975.

1268. Apple ultimately asked Microsoft for a guarantee totaling $[redacted] billion over the next five years, which would exceed even the $[redacted] billion that Apple projected to receive from Google. UPX0536 at -907–08 (Cook (Apple) told Nadella that “[Apple] needed a guarantee for the first five years with the numbers mentioned below.”). Apple knew there was “no way they [were] going to do it.” Tr. 2522:3–2523:23 (Cue (Apple)); Des. Tr. 74:9–75:5 (Apple-EC 30(b)(6) Dep.) (Apple requested the guarantee “just to kind of end the discussions and quit wasting time.”).

1269. Microsoft calculated that agreeing to Apple’s requested guarantee would require Microsoft to incur multiple billion dollars in losses. Tr. 3135:21–3137:20 (Tinter (Microsoft)) (“we could not meet the number,” and “mak[ing] Apple whole . . . would have represented a multi-billion-dollar investment on Microsoft’s part”); id. (“In the short term, it would have been highly negative.”); id. 3269:17–32:72:10 (explaining UPX0115 at -139 and that Apple’s request would have required Microsoft to incur between $[redacted] million and $[redacted] billion in losses in the first year of the deal).

1270. Microsoft was open to incurring losses of this size to achieve the long-term scale benefits of a deal. Id. 3135:21–3137:20 (“[W]e looked at the gap -- the gap relative to the numbers, we said, [t]hat is an investment that is worth making.”); Tr. 3503:22–3504:17 (Nadella (Microsoft)) (Microsoft prepared to incur billions of dollars in losses to gain scale and become more competitive).

1271. However, to reduce the risk that it would incur even greater losses due to lowerthan-expected query volumes, Microsoft requested that Apple commit to sending Microsoft a particular volume of traffic. UPX0628 at -943 (Mr. Nadella (Microsoft) wrote to Mr. Cook (Apple): “As we discussed, the numbers are well above both the internal Microsoft and third party estimates . . . . I think it makes sense to move back to a structure where Apple guarantees the volume of searches and Microsoft guarantees the revenue per search.”).

Apple was unwilling to make this commitment, meaning that Microsoft would be on the hook for even more than the billions in losses that it was already projecting. UPX0628 at -942 (Mr. Cook (Apple) to Mr. Nadella (Microsoft): “We are concerned about the proposed structure of the deal.”); Tr. 2518:25–2519:11 (Cue (Apple)) (Microsoft would owe Apple the guaranteed amount regardless of the revenue that Microsoft generated from searches on Apple devices).

1272. Microsoft also faced a major disadvantage relative to Google with respect to quality. Supra ¶ 560. After conducting its quality assessment, Apple found that “it was clear to us that there’s no way they were an alternative or a choice that we could make for our customers.” Id. 2512:20–2513:20. Apple concluded that there was [redacted]. Id. 2530:14–2531:13. Ultimately, given Microsoft’s monetization and quality disadvantages, Microsoft was “never close to a deal.” Id. 2522:3–2523:23. Apple decided instead that it was a “no brainer to stay with Google as it is as close to a sure thing as can be.” UPX0273 at -974.

1273. In 2018, Microsoft reinitiated discussions with Apple about a potential search partnership. Tr. 2580:9–17 (Cue (Apple)).

1274. Microsoft put “everything [] on the table” with respect to possible deal structures, including (1) “a pure commercial deal” for Microsoft to “power [an] Apple Search experience,” (2) “put[ting] the search business into a joint venture,” or (3) “sell[ing] Bing to Apple” entirely. Tr. 3275:5–3276:15 (Tinter (Microsoft)); Tr. 3658:19–3659:11 (Nadella (Microsoft)) (“We had all kinds of strategic flexibility. . . . We were going to take whatever Apple felt was their chance as a success with the technology.”). Microsoft was willing to “put everything on the table” because, given the importance of scale in mobile and Google’s control over the Android platform, an Apple deal was “really the kind of [] most compelling idea that we had.” Tr. 3276:16–3277:23 (Tinter (Microsoft)).

1275. But Microsoft’s flexibility was not enough to overcome its disadvantages. Although Microsoft believed it may be able to beat Google’s payments in the United States, it could not do so in other countries given Google’s monetization advantage; Google’s “all-ornothing” deal with Apple made a U.S.-only deal impossible. Tr. 3135:22–3139:2 (Tinter (Microsoft)); UPX0736 at -416 (“We talked about the single country idea. He [Apple VP of corporate development Adrian Perica] said this won’t work for them [Apple]. They don’t know how to make [it] work with [the Google] agreement.”).

1276. In addition, because Bing lacks scale in mobile and international queries, Bing possessed “acknowledged product gaps” in these areas. Tr. 3252:13–3255:3 (Tinter (Microsoft)) (“A major contributor to the quality gap was the lack of scale.”). These gaps concerned Apple. UPX0240 at -507 (“Not having mobile queries at scale is a huge liability for them since the most important search signal is engagement.”); UPX1125 at -286 (Mr. Giannandrea wrote: “While we could do something in the US, I[’]d worry about international quality.”); UPX0754 at -298 (“The unknown about Bing from our consumer experience is [internationalization] quality and we will hopefull[y] have more data soon. The bar is high, we know that when we use [G]oogle we get world class resu[l]ts and revenue.”).

1277. Bing attempted to convince Apple that access to Apple’s query scale would enable Microsoft to make sufficient investments to improve its quality in these areas. Tr. 3252:13–3256:16 (Tinter (Microsoft)); UPX0797 (“playbook” describing investments Microsoft could make to take advantage of Apple’s scale and improve international quality). These attempts proved unsuccessful, and Apple determined that “[redacted].” DX0376 at -201.

1278. Ultimately, Apple viewed Microsoft’s efforts as a “desperate move to get rid of” Bing. Tr. 2581:20–2582:6 (Cue (Apple)). Mr. Cook decided that Apple “[redacted].” DX0376 at -201.