It's really a thrill to watch, like watching a game between two shodans in go. Charles H. Ferguson has an article in the MIT Technology Review that contains a very good introduction to the hobby. His summary what the stakes are is the most succinct yet:
Google and Microsoft will be fighting to control the organization, search, and retrieval of all digital information, on all types of digital devices.Throughout the article he demonstrates a deep understanding of strategy in business and IT. He has a serious point when he says that MS could easily gut their AdSense revenues by undercutting them on adverts, but this is legally risky. One of his central points is that control of at least one platform is a prerequisite for success, and so far, Google controls none.
There are some things however that I could take issue with. Firstly, it's important to recognise that Google is a service, not an application. Google is winning on quality of service, and (as demonstrated by Google Suggest) is still evolving ahead of the competition.
Google should understand that it faces an architecture war and act accordingly.I believe this is about right. Ferguson warns Google away from developing a client-side architecture (in the shape of a browser) elsewhere. This is because getting sucked into a war of client-side architectures with Microsoft is a surefire step to disaster. That's what Netscape did, or tried to do. So did the Network Computer, and OS/2 Warp.
However, to "act accordingly" is never a good thing, and in this case is to bend to Microsoft's will, and to lose the initiative. It would also heavily impact their response time and put a strategy tax upon their shoulders to boot.
Now, having said this, I agree with him 100% when he puts forward the need for a Google API. Rolling out a complete server-side API is an important step to Google, for several reasons:
Firstly, whether internal or external, there must be some wholesale method of adding to and querying from Google's database. This is a necessity if Google wants to expand the breadth of it's search, either into the deep web or down the long tail of personalised search. As said elsewhere, half of Google Labs is likely already using the API in beta form.
Secondly, server-side wars with Microsoft have been fought and won - J2EE has whupped COM+ etc. in the enterprise, and it's too early to tell the score for .NET. You have better odds on the server than on the client.
Thirdly, the web client is already rich enough for Google's purposes. One of the interesting side-effects of the browser war is that MS helped make the web rich enough that anyone could threaten the desktop without actually landing on it.
In this respect, their extension onto the web opened up an avenue of attack against themselves. Google only has to touch on this for Microsoft to start panicking, no doubt the desired effect. After all, MS is too big for Google or anyone else to take down by themselves. Only if Microsoft's biggest enemy (itself) starts to co-operate, then do things start looking grim.