Microsoft VS Google: Who Wins?

I don't know if you ever heard about the super lions that got stuck in a remote island in Africa and had to survive by only hunting massive buffalo. The lions got isolated from the mainland 15 years ago when the course of the river changed, and a huge herd of buffalo and lions were trapped on a piece of land measuring 200 square kilometers. The lions fed only on Buffalo for lack of choice. This unique diet of protein-rich buffalo meat has led to the development of huge muscles, and these super-cats now dwarf regular lions. But what will happen if the lions get so good at hunting that the buffalo population declines to the point it can't support the lions anymore? Great question, and very relevant to U.S. big tech companies.

For the past 20 years, the top U.S. technology companies such as Apple, Amazon, Google, Microsoft, "Facebook" as well as others, dominated the global stage like Shaquille O'Neal once dominated the paint in the NBA. Big tech are still the big bad bully in the room but things have changed. Massive and fast growing innovative businesses grew these companies to trillions of dollars in market cap devouring everything in their path to get more growth and become super companies much like our super lions in Botswana. Heck, this is still happening as we speak. Microsoft’s $75 Billion acquisition of Activision Blizzard will only stop if the anti trust authorities stop it.

That's all great, but at some point, they lions will run out of buffalo, and the same seems to be happening to big tech right now. With the pandemic revenues long gone the big tech seem to be turning on each other for food, and it means one thing: some will become even bigger and some will shrink and die. Darwin would have loved this game.

It's more than Google VS Microsoft, although this is the focus of this write up. Apple is trying to kill Meta's advertising business. Amazon is trying to do the same to Google. On the other hand, Google is going after Amazon's and Microsoft's cloud business. Apple is getting into payment facilitation taking shots at PayPal and others, it's a complete free for all like the old WWE Royal Rumble. Having said that, the biggest battle of them all has just kicked off and the loser will pay with their life.

Microsoft decided to go at Google's neck, trying to go at Google's cash cow search engine monopoly, and its massive advertising dollar generating search engine. Google dropped the ball on Bard and it set up Microsoft perfectly to re-launch the pretty much forgotten Bing search engine.

When a $2 Trillion dollar company is going at it against a 1.2 Trillion dollar company, the end result will be very ugly for one of them, but the question is who? Well, I don't have a crystal ball so I don't know for sure, but....

Microsoft has a more diversified business, with revenues evenly split between cloud, personal computing and business solution. Google's bread and butter (and 80%) of its revenues is advertising. Kill the head and the body will die kind of thing. Google's failure to diversify its business beyond ads can now come back and bite it in the ass. They can't buy their way out of this, they have to fight Microsoft (a company twice their size) head on.

Now look, I'm not saying it's a layup for Microsoft. Not at all. This will be a bloody fight between 2 companies with over 100 billion of cash as firepower, but for Microsoft, the path seems simpler, kill the advertising business and Google can't really fight back anymore in cloud services and anywhere else for that matter. For Google, you have to fight on multiple fronts, and when the opponent is Microsoft, this would be a herculean task.

If this was a boxing match, I'd give Microsoft the favorite position, but Google still packs one hell of a punch, and it definitely has a punchers chance. In any case, this will be one hell of a show folks.