Microsoft vs. Google: The Data War

Google began with an almost ridiculously simple web site in an age of complexity. At the same time, the most popular search engines including Yahoo! were complicated and verbose portals of information, sorted into detailed categories. Google appeared with little more than a dialog box and very rapidly changed the way people seek out data on the Internet.

Yahoo! which has changed its face but not its quantity of front-page content over the years, remains, for now, the most frequently visited website in the United States, according to Alexa.

Google has become the second most frequently visited web site in the United States, but remains third in the world behind Yahoo! and perennial giant, The Microsoft Network (MSN).

And that is where we pick up our story; the story of the war between two giants who are making the Internet only big enough for one of them.

This year, Google and Microsoft have been working feverishly to sign agreements with other popular websites to supply them with advertising and search technology.

Google dropped a bunker-busting nuclear bomb when they signed MySpace, the third most trafficked site in the world and the most popular social networking portal on the Internet. As reported, Fox Interactive Media, MySpace's parent company, agreed to have Google provide all of its search and keyword-based advertising solutions. This deal represented a massive show of force from Google as Microsoft had previously failed to secure the same agreement with Fox.

It is also relevant to note that MySpace.com alone reaches more people per day in the United States than MSN.com. MSN.com is the fourth-ranked website in the U.S., just behind MySpace.

Microsoft scrambled to rebound from this news by quickly signing an advertising deal with Facebook, the second most popular social networking portal. This was a necessary step, but as colleagues at Seattle PI reported, the deal raised some desperation alarms. The Wall Street Journal reported that this deal was reached and signed over a weekend at the same time Facebook was starting to seriously talk with Google. This shows that the agreement may have been rushed to avoid losing both MySpace and Facebook to Google.

While a positive salvo for the Microsoft side, this deal is no where near as large as Google's pact with Myspace. Facebook, amazingly popular with college students, has less than 10 percent as many reported users than MySpace.

Google also reached a deal Aug 2 with XM Satellite Radio to provide automated solutions for its advertisers. The same day, it was reported that Google and long-standing Microsoft partner, RealNetworks, reached a deal that has Real offering its users the chance to bundle its software with Mozilla Firefox with Google Toolbar. Firefox has, itself, fired pot-shots at Microsoft's web-browsing dominance.

Now comes the kicker, WSJ Online reported today that Google's CEO, Eric Schmidt, was elected to the Apple Computer board of directors.

Yahoo! appeared to gain strength when CNET repprted a "Google buster" deal between Yahoo! and internet auction original, Ebay, May 25. That was busted when Ebay signed a new deal Monday, with Google.

Google and Ebay have never gotten along, but they both see green and the auctioneer was all too quick to forget Yahoo! for Google and a new feature called "click to call" advertisements, which will be household term in a few months.

All eyes should now be on YouTube, which has not signed an exclusive advertising deal with anyone yet. Google, and its ability to put dollar signs into even Rupert Murdoch's eyes, may be the one to win over YouTube, a popular free video sharing and hosting service. Google promised News Corp $900 million in the MySpace deal. This would put Microsoft even farther behind Google in the data war.

What does this mean?

Website popularity is not just about bragging rights. As previously discussed, it's all about money.

The age of the Internet Service Provider is closing. Even AOL is giving up trying to make money by charging people to get on the Internet. The Internet is no longer a toy or a luxury, it is a vital necessity and a part of everyday life.

But someone, somewhere has to make money off it somehow in order to keep things moving. That's where advertising comes in. As long as people look, read, watch, browse and chat, advertisers--and the people that provide advertising technology--are going to make money.

The war is about who gets the biggest piece of the pie.

Microsoft and Google are the Soviet Union and the United States 20 years ago. One, a lumbering giant trying to hold fast to its traditions but learning it has to adjust to the times in order to survive, and another, a fast moving, aggressive powerhouse jockeying for position.

Yahoo! absolutely will lose its market share if they don't make a large move very rapidly.

There are no missiles or walls this time, only information: not just the ability to search for information, but the ability to store, gather and provide information–the exclusive ability. Some of that information is not necessarily requested, but advertising is the price people are going to pay for free content and services.