Google Puts Microsoft on Its Heels

This column was originally published on RealMoney on Aug. 24 at 9:00 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

With all the hullabaloo about Google's(GOOG Quote) huge growth and outsized market cap, the most common refrain that I hear in discussions of Google is that it's in trouble because Microsoft(MSFT Quote) is going after Google's business.

My answer to that is, has been and will continue to be: Flip it. Simple math shows that Google's the hunter here, and that Microsoft, not Google, is the company on the defensive.

To make the point, let's look at where Microsoft is going after Google and then where Google is going after Microsoft. The numbers show that Google has far more to win in these battles, and Microsoft is shouldering far greater risks.

Gates Grapples With Google

Microsoft has spent billions of dollars developing and buying search technology, which is Google's core business. And after all those billions of dollars spent on search technologies, Google's still the dominant search engine, holding 37% market share in July, according to Comscore Networks. MSN stands at about 15%. These market-share figures have been pretty static overall, amid the sector's outsized growth, so while it's not pulling away, it's clear Google's not backpedaling either. ...