Google’s Antitrust Claims Could Push Microsoft Into Search

Google (GOOG) has been talking to the Feds. In a complaint to the Justice Department, the search company claims that Microsoft’s (MSFT)  Vista OS makes it difficult for other companies to get their desktop search to work on PCs. The desktop search function allows users to search files within their own PCs. The feature is core to both Google and Microsoft’s goal of getting consumers and enterprises to use their search engines.

For Microsoft the news must seem like deja vu all over again. The company has been dragged into federal and state court as well as in front of the EU over repeated charges that its uses its OS to dominate other businesses. The company has settled some charges with other firms, including Time Warner and RealNetworks. Microsoft is still in a major struggle with the European Union which is has asked it to open parts of its code base to competitors.

With the Google complaint on hand, the Justice Department will be visiting the Federal judge in charge of watching Microsoft’s potential anti-competitive behaviour in the US.

Google is cleverly using the justice systems as they same time as it launches its own applications for spreadsheet and word processing to go after Microsoft on other fronts.

Microsoft has been slow to mount a real assult on Google’s search business. There has been scant evidence that Redmond has put together the kind of technology and marketing push that might make a dent in Google’s dominant position.

That may change now. In the scales of competition, if Google is going to pull out the stops to hurt Microsoft where it lives, Microsoft would be wise to go after Google’s only real revenue source–search.

Unlike Yahoo! (YHOO) which does not have the engineering or financial resourses to hurt Google, but wishes it did, Microsoft has the resources but has not used them.

With over $1 billion in free cash flow a month, Microsoft has an opportunity to create improved search featuers and spend hundreds of million of dollars to market them. The company could even assemble several next-generation search engines like Powerset, which would leap-frog Google’s current product.

Microsoft would seem to have little choice now. Google has close to a monopoly in search, but its share is not large enough for this to become an argument in the courts. So, it will have to be settled in the open market.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.