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Will Google destroy Microsoft?

Google and Microsoft Partnerships and Rivalries

A key strategy for both Google and Microsoft is to seek out smaller companies that are good at creating certain products or services and then either partner with them or buy them outright. Both Google and Microsoft have made some high-profile deals that have strengthened their place in the market.

In 2005, Google purchased 15 companies for a total of $85 million. These companies ranged from an analytics start-up called Urchin to a 3-D drawing application called SketchUp [source: Google]. One of Google's largest acquisition deals was for the online advertising company DoubleClick. Google purchased DoubleClick in 2007 for $3.1 billion [source: Economic Times]. Google has also formed partnerships with companies like AOL, NBC and the DISH Network. Most of these deals focus on online or over-the-air advertising.

Microsoft purchased 22 companies even during its economic challenges in 2008-2009 [source: Microsoft]. Like Google, Microsoft looks for companies that provide products or services that complement Microsoft's core business. These companies often become the divisions in Microsoft behind products like the Xbox game console or Zune music player.

Microsoft and Google have also battled over some of the same companies, such as Yahoo. When Yahoo experienced financial problems in 2008, Microsoft made a bid to acquire it. Yahoo executives refused to sell the company for Microsoft's price, and Google swept in to make an advertising partnership deal. The U.S. government objected because the deal would give Google a monopoly on the search ad sales market. Microsoft came back in 2010, announcing that its Bing search engine would power Yahoo's search results in exchange for ad revenue. Regulators in Europe and the United States gave the Microsoft-Yahoo deal a green light with no conditions [source: Singel].

Microsoft and Google have also competed for important partnerships, such as those needed to expand their mobile platform market shares. Android mobile OS has made swift gains in the mobile OS market share, going from around 5 percent in January 2009 to 20 percent in May 2010 [source: Quantcast]. Key deals with manufacturers like Motorola along with clever advertising helped make it happen. In March 2010, Microsoft struck back with its own deal with Motorola for placing the Bing search engine on its Android phones [source: Gardner]. Meanwhile, Windows Mobile lost ground as Android moved up, and Microsoft hoped to regain that and more with the release of Windows Phone 7, slated for late 2010 [source: Oiaga].

But not everything is a competition between the two companies. Google and Microsoft joined forces to petition the Federal Communications Commission (FCC). They wanted access to the unused bands in the television frequency spectrum, known as white spaces. Google, Microsoft, HP and Motorola joined forces to create the White Spaces Database Group, which would submit new protocols that standards companies will have to follow in order to take advantage of the white spaces for wireless broadband. In November 2008, the FCC approved the request for unlicensed use of the space. Thanks to this group effort, innovation is starting to happen in the white spaces. In January 2010, the FCC designated Google as one of the administrators of a database for white space devices [source: Whitt].