• Financial Times, Tuesday, January 30, 2007 11 AM

Microsoft Chief Executive Steve Ballmer offered some fresh words on the software giant's struggle to compete with Google in the world of online advertising. Now that Vista is out, Ballmer says Microsoft's next big challenge is to tackle Google's territory.

But wait a minute? Hasn't Microsoft been saying that for years? Ballmer says that heretofore, the threat of open source software has been Microsoft's principal concern. Well, Bill Gates and Ray Ozzie may have been piping on about the Google threat since mid-2005, but this time, Microsoft is serious.

Ballmer underlines the importance of Internet search where MSN's market share continues to fall (sounds familiar). At last count, Nielsen/NetRatings said MSN had an 8% share compared to Google's 51%. This time, Ballmer says the software is out to play hardball, hinting that Microsoft could tap into its $30 billion-plus cash surplus to acquire its way into a better search position: "There may be blockbuster [deals], but the No. 1 thing for us is our own development, and let's call them technology acquisitions."

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