Rishi

The antitrust probe into Google invites comparisons to the case against Microsoft.

But however easy the links are to make, many are also facile. The most significant resemblance between the two situations may be their outcomes.

Google is seen in some circles to be using its dominance in one area to muscle unfairly into others, as Microsoft did. There's even some similar nerdish arrogance. Microsoft founder Bill Gates was famously testy about being deposed by the powers that be. Google's Eric Schmidt and Larry Page recently declined a request by a US Senate subcommittee to testify.

Yet the prosecution's case against Microsoft was relatively simple. Windows held about 95 percent of the market for PC operating systems in the late 1990s. Microsoft forced computer makers to use its Internet browser if they wanted to sell machines running Windows. Customers were constrained. Downloading a rival browser wasn't easy and switching to a machine not running Windows was painful.

Add it all up and Microsoft had a monopoly, abused its position and government intervention was the only immediate cure.

Google's situation is more complex. The firm claims only about two-thirds of the US search market, and its share is increasing slowly. Rivals also accuse Google of putting its services first. For example, its own maps might turn up in search results. But customers can easily use other search engines or type in a website address directly, and search doesn't appear to be a utility in need of regulation.

Smartphones could make a more compelling study. More than a third are now powered by Google's Android, according to comScore, and the figure is growing quickly.

Apps are a potential way to lock in consumers. Withholding the system's latest version from handset makers that favor a rival's services could be a potent stick for Google to wield. Yet its current market share should preclude any immediate challenge.

Though the Microsoft case was simpler, it still took over a decade to resolve. And the most important result was the company pledging to restrain itself.

The Google probe could uncover most anything, but for now the tortuous path and the end result are starting to look like they might be the real kinship to Microsoft.

Facebook is on the verge of becoming the largest display advertiser in the United States, displacing Yahoo.

The social-networking site, which held off on running ads in its early days in order to avoid alienating its users, will grow its net U.S. display revenues by 80.9 percent this year to $2.19 billion, according to a new study by Internet research firm eMarketer. That will give the social-networking giant a 17.7 percent share of the display ad market this year, blowing past Yahoo, which will hold a 13.1 percent share.

"Facebook's supreme popularity--both in terms of numbers of people and amount of time they spend there--creates a plethora of display ad impressions, mainly for its unique form of banners," said David Hallerman, eMarketer principal analyst. "And that popularity is also boosting what advertisers will pay for its display ads."

Facebook is rapidly distancing itself from its major display ad rivals, according to the study. The second fastest growing ad-seller among the top five is Google, which should grow at a 34.4 percent clip this year, eMarketer says. Microsoft, Yahoo, and AOL will all grow at less than 20 percent, all below the overall growth of the market, which the firm estimates will be 24.5 percent.

In 2012, eMarketer believes that Google will make up some of the lost ground. The firm says that Google's display ad revenue will climb 58.3 percent, while Facebook will grow a more modest 31.3 percent. eMarketer, though, cautions that the Facebook estimate for 2012 "is likely on the conservative side" and may be adjusted upward when the firm revises its social network ad revenue estimates in August.

Even with that slower growth, Facebook will extend its overall share of the display ad market in 2012 to 19.4 percent. Yahoo will slide to a 12.5 percent share while Google will account for 12.3 percent of total revenue, up from 9.3 percent this year, according to the study.

Facebook's leadership in display advertising comes just a year after the company took over managing the sale of the graphical ads on its site from Microsoft. The software giant took on the task when it invested $240 million in Facebook in 2007 and became the exclusive third-party advertising platform partner for Facebook.

Microsoft CEO Steve Ballmer took the stage Tuesday morning at Research In Motion's Blackberry World conference in Orlando, Fla. to announce a new partnership between the computing giant and RIM, several reports indicate.

Starting today, Microsoft's Bing search and maps applications will be integrated into BlackBerry phones at the operating system level, said Gartner analyst Michael Gartenberg via his Twitter feed from the event. The search and mapping technology will include location-based services. Microsoft demonstrated the new Bing application running on a BlackBerry Torch 9800.

NPD Group analyst Ross Rubin, who is also attending the show, tweeted that Ballmer mentioned his love for his own Windows Phone platform, but acknowledged that Microsoft has had a strong working relationship and partnership with RIM. Ballmer also said Microsoft plans to "invest uniquely" in BlackBerry services.

But Rubin noted during the demonstration, "Bing on BlackBerry tastes more like Windows Phone 7 than BlackBerry."

Although on the surface it seems to make little sense for Microsoft to work closely with RIM, which is a direct competitor in the smartphone market, it is an indication of how stiff the competition is. RIM, which has been a dominant maker of smartphones, is slipping. Microsoft, meanwhile, is retrenching with a new OS platform called Windows Phone 7.

In February, Microsoft entered into a significant partnership with Nokia, under which handset maker Nokia is adopting the Windows Phone operating system.

The companies face enormous competition from Google with its Android operating system and Apple with its iconic iPhone.

The smartphone category of cell phones is growing as overall handset sales are slipping. During the first quarter of 2011, NPD said that unit sales of smartphones went up 8 percent from the previous quarter, amid a 1 percent drop of total handset sales. This was the first quarter that majority of handsets sold were smartphones, making up 54 percent of total sales.

But it looks like RIM is missing out on the growth, as consumers flock to Google Android and Apple iPhone devices. In the first quarter of 2011, Google's Android OS phones made up half of the phones sold, according to NPD. Meanwhile, RIM's BlackBerry OS continued to slip, dropping to 14 percent of sales during the quarter. In the fourth quarter, RIM sold 19 percent of smartphones.

Apple ate into RIM's sales and to a smaller extent into Android sales, which dipped from 53 percent of sales in the fourth quarter to 50 percent in the first quarter of 2011. Apple's iOS jumped to 28 percent of sales during the quarter, fueled in large part by the iPhone coming to Verizon Wireless.

Microsoft, which announced new Windows Phone devices in the fall of last year, is still a relatively small player. But it's banking on its partnership with Nokia to eventually kick-start sales worldwide.

But what's troubling for RIM and Microsoft is that U.S. consumers don't seem to even have them on their radar. A recent report from research firm Nielsen found that 31 percent of consumers surveyed said they plan to buy an Android-based smartphone in the next year. And another 30 percent say they plan to buy an Apple iPhone. Only 11 percent said they expected to buy a BlackBerry. And only 7 percent said they're planning to buy a Microsoft Windows Phone 7 device.

At this week's BlackBerry World, RIM has taken the wraps off several new handsets and the BlackBerry 7 OS that the company hopes will help it compete with Google and Apple. But analysts have given the new devices and the strategy a lukewarm reception.

Stephen Patel, an analyst with the equities firm Gleacher & Co., said in a research note that "newly announced OS7 products appear mostly evolutionary in our view and we prefer to take a wait and see approach as RIMM faces several tough transition quarters ahead and significant execution risk."

Specifically, Patel said he was impressed with some aspects of the new BlackBerry Bold, such as the thin form factor, faster browsing speed, improved graphics performance, and universal search. But he said he sees the new features as narrowing the gap with competition rather than leapfrogging them.

As for Microsoft, it's clear that the company is looking to compete aggressively in the smartphone market. But it's unclear if these partnerships will be effective in helping the company get back into the smartphone game.

The irony for Microsoft is pretty hard to escape.

The federal judge overseeing Microsoft's 2002 settlement with antitrust regulators noted at a hearing today (subscription required) that the software giant had made "extraordinary" progress in resolving outstanding issues. But just consider the much bigger story of the day: Mozilla's new Firefox 4 browser was downloaded 6.5 million times in less than 24 hours. (Check out Mozilla's real-time Firefox 4 download data here.) Compare that to Microsoft's Internet Explorer 9, introduced a week earlier and downloaded 2.3 million times in the first 24 hours.

Turns out the marketplace is doing a pretty good job of what the court tried to do. The Justice Department brought the case, alleging that Microsoft illegally used Windows to monopolize the browser market. A federal judge ruled against Microsoft, leading the company to ultimately settle with trustbusters, a deal U.S. District Court Judge Colleen Kollar-Kotelly has spent nearly a decade overseeing.

It may seem odd that a judge is still overseeing the nearly decade-old settlement. But Microsoft's deal with regulators requires it to abide by a series of guidelines--most notably, disclosing key technical information about making software applications compatible with Windows. Kollar-Kotelly continues to monitor Microsoft to make sure it abides by the consent degree.

In the meantime, though, the battleground for computing has shifted. Windows, the source of so much of Microsoft's power, no longer gives the company the cudgel it once used to thwart rivals. It's still the dominant computer operating system. But Mozilla doesn't need to play by Microsoft's rules to reach the masses. That's because the Internet, of course, matters much more than Windows.

Just look at the browser market. When Microsoft settled the antitrust case, it controlled more than 90 percent of the browser market. In February, according to Net Applications, Internet Explorer held 57 percent market share. It's still the leader. But Firefox has 22 percent of the market, followed by Google's Chrome with 11 percent and Apple's Safari with 6 percent. Certainly one reason for that shift is that the rival browsers are every bit as good, and sometimes significantly better, than Internet Explorer.

Firefox 4's outpacing Internet Explorer 9 in downloads is to some extent Microsoft's own doing. The company put itself at download disadvantage by making IE9, released March 14, incompatible with Windows XP, which, though long in the tooth, is still used by more than 40 percent of Web surfers. The company said it wanted to have a browser that could take advantage of the modern graphics technology of its newer operating systems. And surely, it doesn't hurt to encourage folks using the old operating system to upgrade by limiting the availability of the latest software.

To be fair, the antitrust case has played some role in shrinking Microsoft's power. It'd be hard to argue that the terms of the settlement have prevented Microsoft from using Windows to monopolize other markets. But the antitrust case raised the specter of drawn out regulatory hurdles to major acquisitions, likely tempering Microsoft's acquisition ambitions. And the company instituted corporate accountability guidelines in the wake of the settlement intended to curb the abuses that led to the antitrust case in first place.

The antitrust settlement is set to expire May 12. Much has changed in the intervening years. It faces emboldened rivals such as Google and Apple, as well as new technologies harnessed by Facebook and Twitter. Today's technology landscape would have been unthinkable when Kollar-Kotelly agreed to the antitrust settlement. The biggest change of all may be that Microsoft no longer dominates computing the way it once did. Just ask the folks at Mozilla.

Microsoft filed suit today against Barnes & Noble as well as the makers of its Android-based e-reader and tablet devices for patent infringement, part of its broader campaign against Google's mobile operating system.

The software giant alleges that its patents cover a range of functions "essential to the user experience." The company specifically cites the way users tab through various screens on the Nook e-reader and the Nook Color tablet, both of which run Android, to find the information they're after, as well as the way they interact with documents and e-books.

"The Android platform infringes a number of Microsoft's patents, and companies manufacturing and shipping Android devices must respect our intellectual property rights," says Horacio Gutierrez, Microsoft's corporate VP and deputy general counsel for intellectual property and licensing, in a press release.

Microsoft says it's tried to no avail to reach licensing agreements with Barnes & Noble and its hardware partners. "Their refusals to take licenses leave us no choice but to bring legal action to defend our innovations and fulfill our responsibility to our customers, partners, and shareholders to safeguard the billions of dollars we invest each year to bring great software products and services to market," Gutierrez says.

The suit was filed with the International Trade Commission and the U.S. District Court of the Western District of Washington. Microsoft also named Foxconn International Holdings and Inventec Corporation as defendants in the case.

A Barnes & Noble spokeswomen declined to comment on the suit, saying the company doesn't comment on litigation as a matter of policy. Google, though, fired back. "Sweeping software patent claims like Microsoft's threaten innovation. While we are not a party to this lawsuit, we stand behind the Android platform and the partners who have helped us to develop it," Google spokesman Aaron Zamost said.

Microsoft previously sued Motorola, alleging that several of its Android devices infringe on Microsoft patents. Microsoft would prefer that companies making Android devices follow the lead of its longtime partner HTC, which worked out a deal last year covering its own Android devices.

Despite its many patents, Microsoft rarely sues over infringements. In a blog post, Gutierrez says that this suit is the seventh proactive patent infringement case brought by Microsoft in its 36-year history. "We simply cannot ignore infringement of this scope and scale," Gutierrez writes.

Microsoft, which is losing ground to Android in the marketplace, is pushing hard to take the fight to the courthouse. One tactic: make using Android, which is offered for free to manufacturers, more costly by raising the specter of litigation. Microsoft has claimed over the years that Linux-based products infringe on its patents, which has led to several licensing deals with companies making devices using the technology. And Android is based on the open-source operating system.

As Todd Bishop of GeekWire notes, the patents Microsoft is alleging infringement of are different from the ones cited in the Motorola case. This time, Microsoft is suing over patents such as ones that cover editing electronic documents, and capturing and rendering annotations.

The market for mobile devices is so lucrative that litigation is a key strategy to keep rivals off balance. Last year, Apple sued HTC for infringing on iPhone patents covering the graphical user interface and the underlying design. And Oracle, too, sued Google, alleging it infringed on patents related to Java in Android.

A once loyal partner

The size of the market is clearly one reason why Microsoft is willing to take on Barnes & Noble, long a loyal partner and customer for a variety of products and services. A decade ago, Barnes & Noble was one of Microsoft's marquee partners for its Microsoft Reader software, an early entrant into the electronic book market. Back then, Barnes & Noble created an eBook superstore, using the Microsoft technology, for customers who wanted to read books on laptops and the existing hodgepodge of dedicated reading devices that used Microsoft's technology. That business has since shuttered.

Barnes & Noble also partnered with Microsoft on its ill-fated Windows Live Search Cashback program, which paid rebates to customers who found products with Microsoft search engine and purchased them. And Barnes & Noble lent its name to the list of customers touting its business intelligence software back in 2004.

In addition to a permanent injunction barring the defendants from infringing on Microsoft's patents, the company is also seeking compensatory damages "with interest and costs, and in no event less than a reasonable royalty" as well as treble damages for the defendants "willful and deliberate" patent infringements.