SAN FRANCISCO (AP) — Microsoft Corporation (NASDAQ:MSFT) is skewering Google Inc(NASDAQ:GOOG) again with scathing ads that say as much about the dramatic shift in the technology industry’s competitive landscape as they do about the animosity between the two rivals.
The missive that began Tuesday marks the third phase in a 5-month-old marketing campaign that Microsoft derisively calls “Scroogled.” The ads, which have appeared online, on television and in print, depict Google as a duplicitous company more interested in increasing profits and power than protecting people’s privacy and providing unbiased search results.
This time, Microsoft Corporation (NASDAQ:MSFT) is vilifying Google Inc (NASDAQ:GOOG) for sharing some of the personal information that it gathers about people who buy applications designed to run on smartphones and tablet computers powered by Google’s Android software. Earlier ads have skewered Google’s long-running practice of electronically scanning the contents of people’s Gmail accounts to help sell ads and attacked a recently introduced policy that requires retailers to pay to appear in the shopping section of Google’s dominant search engine.
“We think we have a better alternative that doesn’t do these kinds of nefarious things,” said Greg Sullivan, Microsoft’s senior manager for Windows Phone, the business taking aim at Google’s distribution of personal information about buyers of Android apps.
Microsoft’s advertising barbs could potentially backfire. Even as they help draw attention to Google practices that may prod some consumers to try different services, they also serve as a reminder of Microsoft’s mostly futile — and costly — attempts to trump its rival with more compelling technology.
“It’s always the underdog that does negative advertising like this, and there is no doubt that Microsoft is now the underdog,” said Jonathan Weber, who has been following Microsoft’s “Scroogled” campaign at search consulting firm LunaMetrics.
On the flip side, Google has evolved from an endearing Internet start-up to an imposing giant running Web and mobile services that vacuum intimate details about people’s lives. Despite repeated management assurances about respecting personal privacy, Google has experienced several lapses that have resulted in regulatory fines, settlements and scorn around the world.
Beyond privacy, Google Inc (NASDAQ:GOOG) has been the subject of complaints that its practices are anti-competitive. On Tuesday, a group of companies led by Microsoft said it has asked European authorities to investigate whether Google is acting unfairly by giving away its Android operating system to mobile device manufacturers on the condition that Google’s own apps, such as YouTube and Google Maps, are installed and prominently displayed.
Microsoft Corporation (NASDAQ:MSFT)’s latest ads revolve around concerns already raised by privacy watchdogs. Critics argue that Google hasn’t adequately disclosed that customers’ names, email addresses and neighborhood locations are routinely sent to the makers of apps sold in Google’s online Play store.
At least one group, Consumer Watchdog, has complained to the Federal Trade Commission that Google’s apps practices represent an “egregious privacy violation.” Citing agency policy, FTC spokesman Jay Mayfield declined to comment on whether the complaint has triggered a formal investigation.
Google Inc (NASDAQ:GOOG) says it shares a limited amount of personal information about customers to ensure they get better service and faster responses if any problems arise. The company says the practice is allowed under its terms of service — a document that most people rarely read in its entirety.
Microsoft says it doesn’t pass along personal details about customers buying apps for devices running its Windows Phone software. But there aren’t as many Windows Phone users or apps for that system as there are for Android.
The notion of Microsoft being well behind Google once seemed inconceivable.
A decade ago, Microsoft was the world’s most powerful technology company, with its Windows operating system and Office productivity software pervasive on personal computers. Microsoft’s dominance had grown so extensive that U.S. and European antitrust regulators spent years trying to rein in the Redmond, Wash., software company.
Although Google was growing rapidly at the time, Microsoft CEO Steve Ballmer and other skeptics dismissed the company as a “one-trick pony” that hadn’t proven adept at doing anything besides searching the Web and selling ads next to the results.
Google, which is based in Mountain View, Calif., has since morphed into a multi-faceted juggernaut relentlessly trying to muscle into new markets. The company now runs the world’s most watched online video service in YouTube, the largest email service in Gmail and the most widely used operating system for mobile devices in Android. All of those services provide more opportunities to show the ads that generate the bulk of Google’s revenue. Google is now the company facing the scrutiny of regulators — and Microsoft has been active in making those complaints, including the one announced Tuesday.
“Google is certainly the biggest challenge that Microsoft has ever had to deal with,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management and author of several books about Microsoft.
Microsoft Corporation (NASDAQ:MSFT) has tried to thwart Google by investing heavily in online services, to little avail. Since Google went public in August 2004, Microsoft’s online division has accumulated more than $17.5 billion in operating losses. The losses include an accounting charge of more than $6 billion for Microsoft’s acquisition of aQuantive, an online advertising service that didn’t pan out.
Google, meanwhile, has been steadily increasing profits and share of the Internet search market. Google processes about two out of every three search requests in the U.S. and handles an even larger percentage of queries in many parts of Europe.
Although Microsoft has remained profitable companywide, the Windows franchise that provides its financial backbone has been weakening as a growing preference for smartphones and tablet computers undercuts sales of desktop and laptop computers. Besides doing damage with Android, Google is also trying to dent Microsoft by selling a less expensive, Internet-based alternative to Microsoft’s Office suite. Google also is pushing a laptop operating system built on its popular Chrome Web browser in an attempt to divert even more sales away from Windows machines.