Google, Microsoft Face to Face

After all the talk, direct competition is finally escalating between Google and Microsoft. It’s to a point now that Google even gets mentions in Microsoft company memos.

On Sunday,’s search properties, Alexa and A9, started running Microsoft’s new Windows Live search engine instead of Google’s after their contract expired, a source at A9 told

And according to several published reports, Google on Friday went to the Department of Justice to complain about Microsoft setting MSN as the default search engine in its next browser release.

Silicon Valley considers Google an established giant, but comparing Microsoft’s $39.79 billion 2005 revenue to Google’s $6.14 billion, shows Microsoft still dwarfs even “giants.”

But Microsoft is wary of Google’s explosive growth. And probably for good reason.

Google’s first quarter results drew Wall Street raves while Microsoft’s drew hisses and rants.

In addition, as consumers use more Web-based applications, Microsoft has reason to fear consumer dependence on Google as an Internet starting place.

Google’s free applications, such as Gmail and Calendar, are becoming more popular with Internet users.

And last month, Google acquired Writely, a free Web-based word processor compatible with Word.

Google can offer those applications for free because of its robust advertising business that supports them.

Internet advertising revenues were up 30 percent and Google dominated the field.

To offset Google’s growing ad hold, Microsoft debuted MSN adCenter.

In a company-wide memo obtained by, Microsoft CEO Steve Ballmer highlighted the importance of adCenter to its competition with Google.

“Further development of adCenter is key. Our goal is to create the Web’s largest advertising network, giving us an engine that will enable us to monetize our services and compete against Google.”

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