Google Calls Microsoft Outside

What a difference a year makes! At this time twelve months ago, Google was the darling of the online world. As 2007 progressed, however, the search firm found itself under scrutiny for 'collaborating' with the Chinese government, questions arose about Google's role in privacy issues via its web advertising, and it is in the middle of a lawsuit with Viacom over proprietary content on YouTube.

Perhaps the most interesting development is the head-to-head battle between Google and Microsoft, the undisputed heavy-weight champion of the software world and new contender for the advertising crown. A recent article in The New York Times takes a closer look at this very situation, speculating as to where the two companies might be headed. (Source: nytimes.com)

What have they each got to offer us?

In an attempt to gain a foothold in the applications market, Google introduced some very handy word processing, spreadsheet and presentation software this year. The package, called GoogleDocs, keeps all your files online allowing users to access their information from any computer with an Internet connection. Called, 'cloud computing' this approach has proven very attractive to consumers, with Google reporting a user base of 1.6 million as of November.

Of course with an estimated 500 million PCs running Microsoft Office, Google's numbers are hardly enough to unseat Gates and Co. However, the efforts to do so have not gone unnoticed. In the Times article, Jeff Raikes, President of Microsoft's Business Division, says Google's developments are misguided and arrogant. "The focus is on competitive self-interest," he said. "It's on trying to undermine Microsoft, rather than what customers want to do."

The realm of software is not the competition that advertising is shaping up to be. Both companies have been paying serious money for ad properties recently. Google's deal to buy DoubleClick for $3.1 billion was approved on December 20, and who can forget Microsoft's October surprise with its $240 million over-the-top bid for Facebook? (Source: businessweek.com)

Add to this Microsoft's acquisitions of Multimap, aQuantive (a company similar to DoubleClick).  The Redmond-based company has also arguably cornered the market on advertising on CNBC.com. Google, meanwhile, has been making forays into the mobile market with Google Maps, an iPhone application, and intentions to bid on the wireless spectrum up for grabs when U.S. cable companies go all-digital in 2009. In addition, the search giant wants to get into the Wikepedia game with Knol, and will almost certainly secure its current title as king of the online advertising ring.

There are other players in this game too, Yahoo! for example has a strong user base loyal to its products, and recently made an advertising deal with Adobe for text based ads to appear in Acrobat Reader. But Google and Microsoft are quickly emerging as the dominant players; whatever the outcome, 2008 promises to be a year of significant clashes between the two companies as both corporations seek to out-advertise the other.