The biggest immediate threat to Google’s dominance over web search – and hence the online advertising money machine – is Microsoft’s control over the PC desktop. It’s been clear for some time that Google deeply fears that Microsoft will use the rollout of the new versions of Windows (Vista), Internet Explorer and Office to establish default settings that will lead users to Microsoft’s Live (formerly MSN) search engine rather than Google’s. As I’ve argued before, it’s the fear of the default that underlies Google’s heavy promotion over the past year of the Google Toolbar as well as the Firefox browser, both of which provide ways to wrest control over PC users’ default settings away from Microsoft. Last week, Google took the unusual step of heavily promoting Firefox on its sacrosanct home page – an indication of the stakes involved.

Now, Google appears to be opening a new front in the default war beyond technological competition. Monday’s New York Times features a story by Steve Lohr describing how Google is using its lobbying operation to try to seed governmental concerns about antitrust issues related to Microsoft’s control over default search settings in its browser. Lohr writes:

With a $10 billion advertising market at stake, Google, the fast-rising Internet star, is raising objections to the way that it says Microsoft, the incumbent powerhouse of computing, is wielding control over Internet searching in its new Web browser.

Google, which only recently began beefing up its lobbying efforts in Washington, says it expressed its concerns in recent talks with the Justice Department and the European Commission, both of which have brought previous successful antitrust actions against Microsoft.

Google executive Marissa Mayer tells Lohr, “The market favors open choice for search, and companies should compete for users based on the quality of their search services … We don’t think it’s right for Microsoft to just set the default to MSN. We believe users should choose.” Microsoft counters that the default search setting is easy to change. An executive with Microsoft’s Internet Explorer team tells Lohr that “the guiding principle we had is that the user is in control.”

The article provides a clear sense of the power of the default. According to Google estimates, when PC owners have a search box embedded in their browser, they use it for “30 to 50 percent” of their searches. The browser search boxes thus form, writes Lohr, “a crucial gateway to the lucrative and fast-growing market for advertisements that appear next to search results.” My own experience backs this up. I usually use Apple’s Safari browser, which, ironically, has Google as its default setting. I’d say I use it for at least 70 percent of my web searches.

This seems like a bit of a risky move for Google, given its current dominance in internet search. It seems possible that it could come to rue the day that it asked for increased government attention to competition in the search arena. But apparently it sees the threat as large enough to warrant the risk.

UPDATE: Late Sunday, the blog of Microsoft’s Internet Explorer team posted a response to the Times story (without actually mentioning the story). “The typical default when users install IE7 on their Windows XP machines,” the post says, “will most likely be their usual search engine. Despite claims from some people around the web, MSN is not ‘The Default.’ The search box in IE7 uses IE6’s AutoSearch setting because we think this setting is the best indication IE has of the user’s preference.”

UPDATE: Peter O’Kelly identifies one of the important subtexts to the story:

I think this complaint also says a lot about Google’s confidence in its customer/brand loyalty – if Google is worried about people dumping it for MSN Search because it’s not worth the extra effort to click twice in IE7 to change the default search setting, perhaps Google fears it really does have a one-click brand loyalty problem.

I wrote about the (re-)commoditization of search last November:

The low switching costs [involved in changing which search engine you use] could turn into a big problem for Google for a simple reason: basic internet search is once again a commodity. Do a search on Google or MSN or Yahoo, and you’ll find little differentiation in the relevance of the results. Yes, if you’re a super-sophisticated searcher, you may be able to point to variations that you think are important, but casual searchers won’t notice any difference – and the vast, vast majority of searchers are casual searchers. There may be another great, proprietary breakthrough in internet search in the future, but for the moment Google has lost its lead.

Defaults have the most power when differences between alternatives are weak.

UPDATE: On a related note, Monday’s Toronto Globe & Mail has an article, by Simon Avery, on Microsoft’s aggressive plans to take on Google in online advertising. Avery quotes a Microsoft executive describing Bill Gates: “Now all he cares about is advertising.”

UPDATE: More of my thoughts can be found in my next post.