The United States Dept. of Justice wants Google to give up the keys to Android — Should Microsoft make the fabled "Surface Phone"?

Lumia 950 and Surface
Lumia, how we miss you. (Image credit: Windows Central)

Windows Phone is dead. You know it, I know it. Everyone knows it. As painful as it still is, the world has accepted a duopoly in mobile computing, revolving around iOS and Android.

Apple is the darling of the U.S. tech industry, and has enjoyed a privileged spot dominating the western phone landscape, but globally, things are a bit different. Google's Android platform is by far and away the most-used mobile OS, owing to the fact smartphone manufacturers of all shapes and sizes can tap into it. Apple iOS is for iPhone only, and they're not exactly the cheapest devices on Earth, giving Google's platform a significant global advantage, particularly in smaller economies. Europe and the far east also love their Android devices, with Samsung taking pole position in most markets outside of the United States. Its market share has faced headwinds though, with increased competition from Chinese home-grown high-quality solutions from companies like Huawei and Oppo.

In any case, Microsoft is nowhere to be seen among any of this. Save for a few barely-maintained Android apps, Microsoft has largely given up on all of its smartphone aspirations. I can't remember the last time the Microsoft Launcher on Android got a serious update save for a half-hearted Copilot integration, and the app has some major bugs on Samsung devices that have been unaddressed for years. SwiftKey was once the most-loved keyboard app, and now languishes largely abandoned. The Surface Duo 2 folding phone was also abandoned, never receiving the latest Android versions, and is now likely a security hazard to actually use.

Yet, having very little presence on mobile I would argue is a huge issue for Microsoft. And sure, Microsoft's early investment in OpenAI stands to generate revenue for the company effectively in perpetuity, even if it does nothing. But Microsoft's abandonment of the "mobile computing" endpoint has effectively given the keys to its future away to competitor companies. OpenAI, Apple, Google, and others are set to direct the ebb and flow of consumer AI, not Microsoft. Microsoft is also locked out of expanding its "Xbox everywhere" approach, with Apple and Google blocking Xbox Cloud Gaming.

RELATED: On the enormity of Microsoft's Windows Phone shutdown mistake

Hindsight is 20-20 of course. CEO Satya Nadella previously lamented Microsoft's hasty shut down of Windows Phone. Indeed, with no skin in the game, Microsoft has no capability to force the hand of competitors in shaping the future of mobile gaming, consumer AI, or consumer computing in general. They can't be the "default" app on a huge swath of endpoints, but perhaps there's an opportunity on the horizon that could change that.

Let's go crazy and indulge me in some thought experiments for a moment.

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The DOJ might be creating the right conditions for an actually profitable Microsoft Android phone (maybe, possibly)

Surface Duo 2 Vs Surface Duo1 Screens

The Surface Duo represents some of the most elegant hardware Microsoft has ever committed to retail. But, it was held back heavily by its software. (Image credit: Source: Daniel Rubino / Windows Central)

While this could all (very likely) amount to nothing, the United States Department of Justice (DOJ) is recommending "remedies" to unravel some of Google's monopolies, similarly to what happened to Microsoft in the late 90s with Internet Explorer. Some of you of a certain age might remember a period where Microsoft was forced to offer a browser choice screen when opening up Windows — ending Internet Explorer's run as the world's most popular web browser forever, and MSN's (now Bing's) viability as a search engine.

With Chrome rising to dominance with Google affixed as its default search engine, Microsoft and other companies were doomed to never find the query data necessary to build viable search algorithms. Now, the U.S. thinks that allowing Google to corner the browser market in tandem with its search engine monopoly might've been a bit of a bad idea. It has accused Google of abusing its search and ad monopoly to promote its own products and services, and has begun seeking "behavioral remedies" and other solutions to promote competing products.

Google is currently appealing the ruling, but the U.S. DOJ has already recommended that the company be forced to license its search data to rivals, end paid agreements that set Google as the default search engine (such as with Safari on iPhone), and also sell off its Chrome browser. Whether or not these remedies would actually help competition remains a contested topic, given that the DOJ would effectively be forcing everyone to hitch their wagon to Google's search engine data in order to even come close, which could ironically give Google even more control over search. Google currently controls 90%~ of that market, with Microsoft Bing, at number two, with a mere 5%~ based on some analyses. But we're not here to discuss search today, although it is part of the puzzle.

Without a mobile endpoint of its own, Microsoft has conceded the ability to compete in a variety of consumer-oriented tech verticals. (Image credit: Jez Corden | Windows Central)

We've established that being unable to set itself as the "default" app on devices is preventing Microsoft from even getting its products in front of people. There's been a lot of contention about how Microsoft has been "forcing" Microsoft Edge as the default web browser on Windows 11 for some time, but simply allowing Google to control the entire internet doesn't exactly seem like a great alternative. (And hey, Microsoft Edge is pretty great these days, damnit).

Either way, this isn't about necessarily simply railing on Google (as fun as it is). People use Chrome because it's arguably the best. People use Google because it is also the best. The issue is that competing products aren't even given the vaguest opportunity to grow and offer something different. That's why Microsoft was forced to give up Internet Explorer's dominance in the first place. It was holding the internet back. Arguably, Google could also be holding the internet back, wiping entire businesses off the face of the Earth at a mere whim when it changes its algorithm without solid explanations. What if there were other, better ways to do search? We'd never know, simply because companies can't get the data they need to build a viable global search model. What would Bing look like if it actually had the data it needed in order to offer more accurate results? Bing generally performs well for easy searches, but stumbles when it comes to granular, detailed, or local search results.

In a world where Google might be forced to give its competitors a leg up, Microsoft might have the vaguest opportunity to compete not only in search, but perhaps even in mobile hardware. A huge part of Android's profitability framework is a result of the user data Google receives from Chrome and Google Play apps. And indeed, the DOJ was also at one point considering forcing Google to divest Android itself.

What if Android was truly open?

Surface Duo 2

The Surface Duo 2 was flawed, but it was also hamstrung by Google's rules. (Image credit: Future)

Google's Pixel smartphone line has increased in popularity over the years, although it remains quite small compared to the likes of Samsung. One advantage Google has here is that its hardware is subsidized to some degree, since it controls the Google Play Store where apps and games are delivered. Pixel phones thus can either undercut competitors, or enjoy better margins on software sales, and by wielding the search data monopolistically (allegedly). Samsung phones have the Galaxy Store, but it's not the default app store, and it's not really something people generally use.

Google forces companies using its version of Android to set all of Google's apps and services as the default out of the box. It's easy to switch them over of course, and you can effectively turn a Samsung Galaxy into a Microsoft Galaxy by switching to Microsoft Edge, Microsoft Launcher, Microsoft Authenticator, and so on, but it's not something 99% of users are likely to do.

The "behavioral remedies" the DOJ seeks to implement into Android pertain largely to search, although Google lost a similar case recently over its Google Play Store. Microsoft prematurely announced it would launch its own Android app / game store as a result of that ruling, which was almost immediately frozen as Google appeals it. Clearly Microsoft wants to be in mobile, it's just waiting for the right time.

Clearly Microsoft wants to be in mobile, it's just waiting for the right time.

The issue with building devices on Google's Android revolve around those pesky rules. Google takes 30% of all transactions that run through Google Play, and its "default app" status makes it the dominant place for developers to build services. It also has very anti-competitive rules baked into it. For example, Amazon can't sell books through its Kindle app on Google Play, despite the fact Google can sell books through Google Books on Google Play. Microsoft can't sell cloud games on the Xbox app on Android, despite the fact Google shut down its own cloud gaming service.

Apps like Twitch, Spotify, and many more are stifled by Google's "default app" monopoly on this platform, and this control it has extends to its search dominance. Google controls all the data that flows through those apps and services as well, helping inform it what ads to serve you as you roam around the internet.

The cut Google takes on Google Play, the licensing model it runs for Android, and the default apps clauses make it more difficult for Android manufacturers to compete in the space. Samsung has established itself as the dominant Android manufacturer, but its margins on smartphones are nowhere near as good as Apple's, because it has to pay Google in the middle. If you were a smaller company like OnePlus or a newcomer like Microsoft, you pretty much don't stand a chance without an absolutely gargantuan amount of investment, or some kind of killer innovation that upends the market. A more open Android could help improve the margins on building a "Surface Phone," where Microsoft would be free to set up its own apps and services as the default, sell Xbox cloud games directly, and perhaps even deliver Windows 365 and other services by default. As of right now, Google's control over Android would prevent that. Microsoft could build its own operating system again, but the ship has more than likely well and truly sailed on that possibility. The app gap would just be too absurd coming in so late, making Android the last, and only viable path towards returning to mobile.

Alas, 'tis but a dream

Surface Slim Phone Concept

This Surface Slim phone concept would've been a great conduit for Microsoft Copilot. (Image credit: Sapounii via Reddit)

The DOJ says that if its Chrome divestiture and search licensing model isn't enough to promote competition, it reserves the right to seek a divestiture of Android itself. A more open Android either as part of behavioral remedies or a divestiture could give Microsoft one last, final chance to build a competing phone and thus, deliver its own apps and services as the default option. It would be the last, final chance it would have to meet consumers in their palms, rather than at their desks. It would be the only way to get consumers acquainted with things like Microsoft Copilot, and would be a strong endpoint for things like Microsoft Edge, Bing Search, and Xbox Cloud Gaming too. But, even if the DOJ did spin off Android, it's heavily unlikely to happen.

Microsoft's most passionate hardware innovator and phone enthusiast Panos Panay left the company for greener pastures, after Microsoft's interest in building its own hardware ecosystem dwindled. Microsoft is still building Surface tablet PCs, but they're nowhere near as popular as they once were a few years ago. The Surface Duo 3 was cancelled, and the Surface Neo tablet never even hit production.

The Surface Duo was an oddity whose elegant hardware didn't line-up with the operating system it was designed for. But what about a more traditional rectangle phone, designed from the ground up for Microsoft apps, with a Microsoft-first Android app store that gave developers a better cut than Google? A playground where Microsoft could innovate on actually useful AI solutions that require a device you can put in your pocket and have with you at any time, rather than the device that is tied to your desk? I don't see how Microsoft Copilot is ever going to find traction tied to desktops, when smartphones have so many more use cases attached for day to day tasks. But, I also don't see how today's Google-controlled Android would ever be a viable platform for Microsoft (or frankly anyone new) to attempt to build a smartphone on. Unless, unless it was fully cracked open by the United States regulatory powers.

But with a new election behind us and priorities shifting, this entire article is likely just an exercise in "what could've been" wistful Surface Phone fantasies. This is of course ignoring a mountain of other issues, like whether or not people would put their trust in Microsoft again after so many rug pulls ... but it's fun to dream, sometimes.

What do you think? Hit the comments, let's chat.

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Jez Corden
Executive Editor

Jez Corden is the Executive Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by tea. Follow on Twitter (X) and Threads, and listen to his XB2 Podcast, all about, you guessed it, Xbox!

  • ShinyProton
    Seriously?
    Windows Phone is long dead and already decomposed. Leave it there.

    Microsoft totally lost its mobile market presence - for both consumers and developers. Furthermore, it's not even able to make a decent Android phone that would appeal the mass and support it properly.

    No. Just no.
    Reply
  • GraniteStateColin
    I would love this, but I don't think MS has the culture to do this any longer. To be sure: I would love to be wrong on that. I hope I'm wrong. I want a vibrant MS.

    Microsoft has demonstrated with the loss of Panay as merely the capstone example of their abandonment of end-user touchpoints and concern for great EUX (end user experience). This excellent article includes others: like the effective abandonment of Android versions of their apps and the end of Windows Phone and Duo. Other recent and key examples: their mismanagement of the Xbox ecosystem, the lack of innovation in Windows, the termination of multiple PC-based hardware initiatives, the lack of advancement in all apps (with the possible exception of Teams, but even those changes are mostly back-end and not user-facing). Hell, Excel still has a single combined undo across all open worksheets and no dark mode, Outlook is stalled pending a move to some deflated, knee-capped web-app.

    I think what Microsoft has become is based on Nadella's vision for a company that provides back-end services and infrastructure to other companies. He views that as high-margin and low-risk and he does cloud services well. He tried to add holographic computing, but that was too close to a direct user touchpoint, and so it failed. His hope with AI is that MS can just function as a background provider of the capabilities, no direct user connection (and we can already see how Copilot is failing compared with others, even if its underlying AI is better). Nadella seems incapable of driving success and greatness among his lieutenants in any other areas. In fact, he seems to snuff any bright spots that do arise, hence Panay's flight for his own sanity.

    Microsoft needed someone like Nadella with his Azure background and strong cloud focus to move Office into the modern era and grow MS' IaaS (Infrastructure as a Service) platform. But that is all running well. What MS now needs is a leader to rebuild their end-user experience side w/o breaking the good that Nadella has done on cloud and IaaS. Absent that, unless the government blows up Google to save MS (and as much as I dislike Google, their fall should not be due to governmental meddling), MS is going to see its ability to push its core cloud and IaaS offerings suffer against Google who can better bundle a full stack experience including end-user applications and features on dedicated hardware.

    The tragic irony is that MS still has good relationships with hardware partners. It was (and for some may still be) the gold standard in treating third-party developers extremely well. It has some of the best development tools on the planet. These are all strengths, strategic assets, that MS is wasting, pissing them away. Worse, absent constant nurturing, those golden-egg laying geese weaken and wither on the vine. (pardon the horribly mixed metaphor).

    So sad to see MS slowly poison everything outside of Nadella's Azure line. He did what he was hired to do: focus on and grow their cloud strengths, but he seems to lack the vision to recognize that even the cloud relies on end-user touchpoints to remain a growth engine over the long, long term. MS is no danger in the next 3-5 years. But after that, if they don't right their EUX (internally and through fostering those external software and hardware partnerships), I think they are likely to grow more slowly than the other tech companies and eventually fade from relevance as they fall not down, but behind the more rapid growth of others. It's not enough to run a good business. You must also innovate faster and delight your customers more than the competition.
    Reply
  • GraniteStateColin
    ShinyProton said:
    Seriously?
    Windows Phone is long dead and already decomposed. Leave it there.

    Microsoft totally lost its mobile market presence - for both consumers and developers. Furthermore, it's not even able to make a decent Android phone that would appeal the mass and support it properly.

    No. Just no.

    I have no argument with your summary statements -- you are indisputably correct on where things stand as of now. But that doesn't mean Microsoft can't learn from what it did wrong, make changes, and be better. In the world before Windows Phone, Microsoft's successes frequently came from failed launches followed by perseverance and iterations, with each new version fixing the problems with the prior version until they got it right (e.g., Excel taking over from Lotus 1-2-3, Word taking over from WordPerfect, taking over GUI leadership from Mac, Outlook taking over Novell Groupware, Windows Mobile coming from behind Palm to mobile dominance, IE dethroning the seemingly unstoppable Netscape, Xbox 360 trouncing PS3). That was how MS beat all its larger competitors to achieve its various dominant positions, approaching each of those as the smaller upstart.

    That approach will work in any area where MS has:

    1. The resources to keep iterating until it gets it right
    2. Strengths it can leverage to have a novel advantage in a new product area

    For mobile, MS has the money to pursue a mobile presence. Three obvious strengths it has that no one else can bring to mobile: MS has the Office install base, IT departments across many enterprises, and Xbox gamers using Gamepass or interested in boosting their Gamerscore (though all of these are fading in importance by the month as MS fails to support them). Further, MS has arguably the best AI backend to produce the most capable mobile device or toolset (whether on top of Android or their own). Therefore, MS has the foundation and resources to prosper in mobile IF IT CHOOSES TO FIGHT FOR THIS SPACE.

    Also, MS should not just scrap things and start over when it realizes it's doing something wrong, but merely iterate in small steps of continual improvement: shave off the rough patches and expand on the parts people like so that it doesn't alienate the early adopters with each generation (e.g., the way they kept shooting themselves in the foot by starting over from Windows Phone 7 -> 8 -> 10).

    MS lost this space because it threw in the towel rather than doubling down and fixing its prior mistakes via iteration. MS has also NEVER leveraged their strengths properly, which is key to any success like this. Basic corporate strategy training teaches using SWOT analysis -- Strengths, Weaknesses, Opportunities, and Threats to develop a plan. Instead of using that, MS threw some crap against the wall, saw it didn't stick and, per Nadella's "Hit Refresh," shrugged and walked away.

    DO NOT HIT REFRESH. ITERATE.
    Reply
  • ShinyProton
    GraniteStateColin said:
    I have no argument with your summary statements -- you are indisputably correct on where things stand as of now. But that doesn't mean Microsoft can't learn from what it did wrong, make changes, and be better. In the world before Windows Phone, Microsoft's successes frequently came from failed launches followed by perseverance and iterations, with each new version fixing the problems with the prior version until they got it right (e.g., Excel taking over from Lotus 1-2-3, Word taking over from WordPerfect, taking over GUI leadership from Mac, Outlook taking over Novell Groupware, Windows Mobile coming from behind Palm to mobile dominance, IE dethroning the seemingly unstoppable Netscape, Xbox 360 trouncing PS3). That was how MS beat all its larger competitors to achieve its various dominant positions, approaching each of those as the smaller upstart.

    That approach will work in any area where MS has:

    1. The resources to keep iterating until it gets it right
    2. Strengths it can leverage to have a novel advantage in a new product area

    For mobile, MS has the money to pursue a mobile presence. Three obvious strengths it has that no one else can bring to mobile: MS has the Office install base, IT departments across many enterprises, and Xbox gamers using Gamepass or interested in boosting their Gamerscore (though all of these are fading in importance by the month as MS fails to support them). Further, MS has arguably the best AI backend to produce the most capable mobile device or toolset (whether on top of Android or their own). Therefore, MS has the foundation and resources to prosper in mobile IF IT CHOOSES TO FIGHT FOR THIS SPACE.

    Also, MS should not just scrap things and start over when it realizes it's doing something wrong, but merely iterate in small steps of continual improvement: shave off the rough patches and expand on the parts people like so that it doesn't alienate the early adopters with each generation (e.g., the way they kept shooting themselves in the foot by starting over from Windows Phone 7 -> 8 -> 10).

    MS lost this space because it threw in the towel rather than doubling down and fixing its prior mistakes via iteration. MS has also NEVER leveraged their strengths properly, which is key to any success like this. Basic corporate strategy training teaches using SWOT analysis -- Strengths, Weaknesses, Opportunities, and Threats to develop a plan. Instead of using that, MS threw some crap against the wall, saw it didn't stick and, per Nadella's "Hit Refresh," shrugged and walked away.

    DO NOT HIT REFRESH. ITERATE.
    I will NOT happen.

    Microsoft destroyed every consumer ecosystem they had. Windows is only alive because of the corporate world and, to a lesser extent, the gaming. The operating system that ruled the world is almost not relevant anymore.

    Microsoft is almost an exclusively cloud computing company nowadays.

    Consumers are gone. They are mobile. With them, developers jumped ship long ago. The Windows Store is a pathetic confirmation of this trend that started almost a decade ago. And it will not change.
    Windows and Office are the last remnants of the glorious era. And both are facing a slow death toward the irrelevancy path. And Microsoft does not really care.

    So, forget about a consumer ecosystem return in the Microsoft realm. Neither Microsoft nor consumers want it.
    Reply
  • GraniteStateColin
    ShinyProton said:
    I will NOT happen.

    Microsoft destroyed every consumer ecosystem they had. Windows is only alive because of the corporate world and, to a lesser extent, the gaming. The operating system that ruled the world is almost not relevant anymore.

    Microsoft is almost an exclusively cloud computing company nowadays.

    Consumers are gone. They are mobile. With them, developers jumped ship long ago. The Windows Store is a pathetic confirmation of this trend that started almost a decade ago. And it will not change.
    Windows and Office are the last remnants of the glorious era. And both are facing a slow death toward the irrelevancy path. And Microsoft does not really care.

    So, forget about a consumer ecosystem return in the Microsoft realm. Neither Microsoft nor consumers want it.

    I agree with most of that. I disagree that no one wants it. I want it. More important, and the reason I want it: it's in Microsoft's strategic interest to want it, even if their current leadership disagrees. They are objectively wrong. With their current path, they are setting themselves on a glide path to irrelevancy, which squeezes margins and hurts shareholders. Nothing that will happen this year or next, but if all a company has is a service with no brand value, then it will eventually become a commodity, and a commodity has negligible value beyond its book value (no goodwill or brand value on top of that, which is where most of the profits lie). That's a horrible place for any tech company to end up and it will shred their market cap.
    Reply
  • Gabe Szabo
    Microsoft burned me with Windows Phone, Surface Duo, Surface, Cortana, Kinect, and they're finally burning me with Xbox, SwiftKey and Launcher. Most if not ALL of these are/were great products that Microsoft eventually gave up on. I'm sure I'm missing dozens more. I think, as Jez points out, Microsoft de-emphasized most if not all consumer products and services - maybe not Xbox, maybe not Windows, but that's probably it. Even Windows is more focused on enterprises.

    I think they should spin off/sell off the consumer-focused parts of the company (or whatever is left of it), including Xbox.

    Edit: oh yeah, add Skype, Teams and People to that list.
    Reply
  • Sex Pistols
    At this moment I'm using my MS Surface Duo 2 and I'm very glad with it. It's a shame that MS never updated it from Android 12L and also now don't update the security software. Therefore I bought a refurbished iPhone 13 mini 256GB and using all my bank account, medical app's and other private apps like from the goverment. As long as other Android apps keep on working on my MS Surface Duo 2 I'm gonna use it.
    I also have a Lumia 950 which is still working and on charging by Qi 24/7.
    I would be very happy if MS makes a new mobile device (phone) and surely gonna buy it!
    I'm using as less as possible Google app's and didn't use Google wallet for pay also.
    Reply
  • notforhire
    all of these arguments are the exact opposite of my arguments re Samsung. Samsung's ecosystem is magnificent as long as you're totally mobile. Google offerings are always lacking and change month to month on a whim, even though they're available both on the web and mobile.

    I use MSFT where I can, and even dipped my toe back in to Microsoft Launcher.... briefly. at the end of the day, MSFT could be more mobile if it wanted. they don't want to.
    Reply
  • jajunk
    Microsoft had to get Azure right first. There was no way they were going to survive on the revenue from consumer facing goods. Look it up. Now that they have Azure in a good spot. And contrary to the news media. CoPilot had been pretty well received from what I have seen.

    With the recent meddling around in the space from the EU. And the Google breakup. I would expect the next couple of years be interesting. A mobile phone from Microsoft wouldn't be surprising.

    Most of the complaints I see from consumers about Microsoft is that it is not the Microsoft from 20 years ago. I agree there are things I miss. But just because I miss them doesn't mean the other consumers miss them. the market changes. Oh well....
    Reply
  • Mapplesoft
    If Windows Phone came back, I would give it another try. It was a fun and revolutionary OS. In the meantime, I will hold on to my iPhone. Not interested in Android, even if it is Microsoft.
    Reply