Microsoft owned the desktop computing space (for while at least) with we now call the “ecosystem”. That is to say, they didn’t just produce Windows, but they produced Windows as a platform. Good developer tools, good office tools, all of this led to them owning that space. Users chose the Microsoft way because the Microsoft way became the only way that really made sense. There’s a lot of really unethical and evil stuff that Microsoft has done and continues to do to keep from losing that space. Windows and Office are their core products.
Everything that Microsoft does (except for, strangely, X-Box, though I’m sure they have a reason for that) is directly tied into Windows. Even their keyboards have a Windows button. Zune, Windows Phone 7 (what a truly awful name), Windows Live, Bing… it’s all built to keep people using Windows. To keep that pipeline of money going directly in Microsoft’s pockets. The chief threat for Microsoft is that people will be able to easily move away from Windows, taking their data (and their money) with them.
Google on the other hand, isn’t building products to protect a platform. After all, you can use Google anywhere. Mac, Windows, Linux, iOS, Android, you name it. You don’t need a particular set of software or hardware to use Google search and be served up Google ads.
The threat for Google is a bit different from the threat for Microsoft. Where Microsoft is afraid their captive audience might slowly drift away, Google is afraid their mostly self-chosen audience might not be able to access Google search. Microsoft’s platform dominance was built on an ecosystem, Google’s search dominance is also being extended through an ecosystem with (and this is crucial) Google by default.
Any time Google is faced with a challenge to their search dominance, they enter that market. Google isn’t the default on your phone? No problem, Google will make software to run on your phone. Google isn’t the default in your browser? No problem, Google will write their own (better, imho) browser. Google isn’t the default on your operating system? No problem, Google will release an operating system.
Defaults are terribly important. Microsoft defaults to Bing. Not because they love search or are even (by a very long shot) a search company or even an internet company. No, Microsoft defaults to Bing because they want to keep you hooked into Windows. Search revenue is incidental. Microsoft’s offerings, such as Bing and especially Windows Live exist specifically to hook you to Windows and keep that cash baby alive. They don’t want cross-platform accessible data freedom. No, they fear that more than anything.
Google on the other hand wants you to default to Google. Not because they want to protect their platforms. The revenue from their platforms is incidental. Google’s offerings, such as Chrome and especially Android exist for no other reason than to keep you searching with them.
And this is why you see Google and Microsoft competing in the same spaces so often. Their operating philosophies are completely different. Microsoft isn’t particularly know (to its detriment) for its whimsy, for example. But they enter the same spaces to do the same thing: Protect their core product. No other reason. They are protecting very different things, and are very different companies, but that’s why they’re there. Make no mistake. Everything Google does comes back to search. Everything Microsoft does comes back to Windows. And so it goes.