Microsoft vs. Google: The battle of the business models

This year’s CeBIT, the world’s largest IT fair, has the topic of “Managing Trust”. For some reason, the “Deutsche Messe”, the company behind CeBIT, decided to have Eric Schmidt as one of the speakers at the official opening ceremony anyhow. Right after the speech of Schmidt, Microsoft sent out a press release “Ralph Haupter comments on CeBIT opening”. Ralph Haupter is the General Manager of Microsoft Germany. The summary of this press release is simple: According to Microsoft, Eric Schmidt just missed the topic. He didn’t talk about managing trust but about some opportunities of the digital world of the future (as Google sees that future). From the Microsoft perspective, it is also about security, privacy, transparency, fair access.

I can’t remember any press release like that, with one vendor commenting that harsh a leading spokesperson of another vendor. Microsoft has positioned itself especially in Europe as an advocate of privacy and data protection laws. They recently announced new versions of their Office 365 contracts which fully take into account the EU requirements. So is this entire thing about privacy?

From my perspective, privacy is only a battlefield which Microsoft has detected in a bigger fight against Google. Microsoft has a long history around security and privacy and they had to learn their lessons the hard way. A good article on that could be found here.

Right now, Microsoft on one hand sees the opportunity to pass the buck (in German it would be passing the “Schwarzer Peter”) to another vendor, with Google being the hottest candidate besides Facebook and (yes!) Apple.

But it’s beyond playing that game- it’s about business. Microsoft believes in a business which is based on accepting privacy and data protection laws. With its strategy it focuses on shredding the image of Google as a provider to the enterprise. Microsoft earns its money mainly with paid services. They were pressed by Google to provide solutions like Office 365. Now they strike back. Microsoft wants to avoid Google becoming a real competitor for that type of business. And by pointing at the privacy issues, Microsoft rubs salt in the wound of Google. Overall, it is about the question whether a business which is based on ignoring privacy can be successful over time or whether companies are more willing to pay for models which rely on accepting the rules for privacy and data protection.

There still a lot of open questions: Bing costs a lot of money. How will Microsoft finance that without an advert model like Google? Yesterday a customer said to me that he switched from Google to Bing quite a while ago because he really hated to see trouser adverts for weeks once he had been looking for a trouser in the Internet. How close are some of the Microsoft Live offerings to what Google does? Currently I observe that Microsoft is carefully watching not to cross the line.

At the end, this fight is only one amongst many others. ACTA and copyright laws in general, QoS (Quality of Service) for some providers or not, software patents and many other discussions are in fact all about the same basic topic: How free is the Internet? And where should this freedom end? It’s also about “might is right” versus a more regulated and thus protective environment.


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