Google’s world is under attack.

Google has decided to remove support of Microsoft’s Exchange ActiveSync (EAS) for non business users. EAS is currently used to sync email, calendar and contacts with mobile devices, may it be iOS, Windows Phone or even Android. EAS is a sync protocol that allows multiple enterprise features that go beyond what normal end users require. This include tools such as marking free/busy time slots, sharing calendars, delegation, etc. All these are key features for business users.

The short term interpretation of this move is that Google wants to push its users towards its favoured ‘open’ standards in CalDAV and CardDAV. This change will not affect users who are already using EAS. This will only be active for new users who are configuring new devices. Also, Google will continue support of EAS for education and government users on top of paid Google Apps users. In short, Google is trying to move as many people as it can away from EAS without pissing too many of them.

Why is Google doing this?

There are multiple short term reasons that are pretty obvious:

1. This is a continued move from removing free Google Apps. Users who want to continue enjoying EAS have to now move to the paid version. However, I doubt many will move unless they are corporate users who, for some reason, are not using paid Google App accounts.
2. Google’s continual attacks on Windows in general is escalating. It publicly announced its decision to not create any more Windows 8/RT/Phone apps. I highly doubt this decision will hold in time. But it is doing its very best to make its own platform more viable.
3. Google doesn’t want to pay Microsoft for EAS licensing when doing so actually encourages use of a competing platform.

The Real Reason

The truth is, Google sees Microsoft as its biggest threat. Eric Schmidt went on record multiple times to publicly state that the tech world has only four players – Google, Amazon, Facebook and Apple. He never did acknowledge Microsoft in any competitive manner. But it takes a fool to believe any CEO’s opinion as fact. In the months he claimed that Microsoft wasn’t a competitor, Redmond was changing its business strategy and moving its focus towards fighting Google’s monopolistic share of the web services pie.

Microsoft is a monopoly on traditional desktops and laptops with over 90% share of the market. It also holds a significant share in home theater setups thanks to its highly successful XBOX console that was late in the console competition but ended up outstripping Sony and Nintendo. On top of that, Microsoft’s dominance in the enterprise sector is unparalleled and much of their products are considered corporate standards.

Google started off on a completely different track. It went for consumers and its revenue stream was ads. Google pushed very hard in the past few years for corporate users to switch to Google Apps from Microsoft’s Office, SharePoint, Server, etc services. It didn’t yield too much fruit especially for higher end corporations that required more advanced features that Gmail and Google Apps just cannot match as yet.

Microsoft wants to expand its dominance into areas where Google’s bread and butter is made.

This year, Microsoft signaled a very strong focus on the consumer sector. Not satisfied with its monopolistic share in markets it comfortably sits in, it wanted a sizable share of the mobile and web services markets as well. In short, Microsoft wants to expand its dominance into areas where Google’s bread and butter is made.

Windows RT, 8 and Phone are strong pushes for mobile. A completely updated and, frankly impressive, change to all its web services is a strong signal that Microsoft wants a part of the pie that Google has been enjoying completely on its own. Many web services were overhauled and integrated:

1. Hotmail has been completely redesigned and improved with Outlook.com
2. Windows Live Messenger has been dumped to push everyone to Skype, which represents the most popular online communication method (Microsoft owns Skype).
3. SkyDrive has been heavily pushed and integrated into all of platforms in Windows including well designed apps for iOS and Android. While DropBox remains the best service in this category, Google Drive is no match for SkyDrive.
4. In responding to Google+, Microsoft is not content to rest on its stake in Facebook. It has pushed its experimental social platform – so.cl.
5. Microsoft has marketed Bing to new levels and have taken political-styled marketing campaigns against Google. This include ads like Scroogle and the older mail man commercials.

Hotmail’s revamp to Outlook was just part of multiple changes

While Google isn’t too bothered about revenue streams from Android (it is free), Microsoft’s mobile platform will not provide the same amount of user data to Google the way Android does. Android isn’t free without a good reason. The massive amount of data from Android users is key to how Google’s web services and delivered and optimized. Also, Google won’t be able to sell ads on Microsoft’s platform.

Google has never faced actual competition for a long time. Android vs. iOS is a joke mainly because Google was going big on iOS as well. Why so? Apple was, is and never will be a threat to Google. Apple is a firm that seeks high margins, not bothering about market share. Google’s business strategy revolves around market share and there is only one firm in the horizon that does the same – Microsoft. In the past, the two never crossed swords but now Microsoft’s new push is giving Google’s its very first fight.

Google is facing its first experience going on defense as the big guy.

Google has always enjoyed its status as a fresh new comer, fighting old and tired products like Yahoo!’s search and mail. But now as a leader in consumer web services, Google is facing its first experience going on defense as the big guy.

Google’s Counterattack

Google’s strategy in defending against Microsoft’s desire to encroach on its space is to hit Microsoft where it hurts first. Windows Phone occupies a tiny portion of the market and Google is going very heavy handed on that segment in this move.

Google knows it cannot fight Microsoft on desktops and laptops. It’s continued support for EAS in almost the entire corporate sector (paid Google Apps customers, educational and government sectors) shows its acknowledgement that it holds no sway in the enterprise sector. Google is battling hard to hold onto its monopoly of normal everyday consumers. The exact same group that Microsoft is now gunning for.

Windows Phone: Google is targeting Microsoft’s weakest spot first.

It Begins Now

Google represented a fresh firm that opened a large scale attack on old and lumbering web companies back in the early 2000s. No one really bothered crossing swords with it on its web services sector. While many people talk day and night about iOS vs. Android, Google was winning whichever platform was dominant. Microsoft’s bold push and change in direction this year will give Google its toughest ever test yet. Eric Schmidt’s refusal to acknowledge Microsoft, now coupled with Google’s most defensive move, signals one thing – Microsoft is the real threat to Google.

Eric Schmidt’s refusal to acknowledge Microsoft, now coupled with Google’s most defensive move, signals one thing – Microsoft is the real threat to Google.

It’s monopoly vs. monopoly. The best result for consumers is not too see a Microsoft or Google victory but a relatively even spread of market share and profits where both sides are locked fighting for the hearts of customers – both consumers and enterprise users.

Economics aside, this represents a tasty battle for industry observers. It’s has been a while since we had a real, large scale, head-on fight.