Why Google launched Chrome

 
New features in rival browsers threatened Google’s search business.

By Scott Moritz, writer
Last Updated: September 2, 2008: 4:59 PM EDT

(Fortune) — Subtle shifts in the search war ignited the full-blown browser battle between Google and Microsoft.

Google’s launch Tuesday of its Chrome web browser is seen as the search giant’s latest assault on Microsoft (MSFT, Fortune 500). The company has been developing Chrome for two years but the timing of its jump into the browser wars is probably no coincidence, given two seemingly small features recently offered by the latest browsers from Microsoft and Mozilla.

Internet Explorer 8, Microsoft’s most recent update to its browser, lets people navigate the Net while hiding their Internet address and viewing history – sometimes called "porn mode."

While this privacy feature isn’t exactly new to the browsing world, it is the first time Microsoft has offered it. And given that Microsoft has 72% of the browser market, that move is seen as a significant threat to Google, which attempts to pinpoint its search results to a user’s interests.

"Google Chrome is partly a defensive move as Microsoft is incorporating functionality in new browsers that may block the collection of ad targeting information," Stifel Nicolaus analyst George Askew writes in a note Tuesday.

For Google (GOOG, Fortune 500) and Microsoft, the browser is the virtual box office of Internet search revenue. Searches create hits and hits create context and ultimately clicks. This is the big money flow in Google’s $16.5 billion annual revenue stream.

Blocking, Tackling

Getting blocked from user information is certainly a critical turn for the search industry, but a recent move by Mozilla’s Firefox goes even further by circumventing the search process all together.

In Firefox, users type a Web address or URL in the address box. With each letter typed the browser offers to complete the process by showing a list of sites the person has visited that correspond with the fragment of the word. For example, you want to go to Wikipedia and your first suggested destinations are Weather.com or Nintendo’s Wii.

Microsoft is notorious for robbing good ideas from competitors, so it will only be a matter of time until this auto-complete feature is in Internet Explorer, the analysts say.

Google has been working on a browser for about two years, but according to analysts the company hadn’t felt compelled to introduce it to the world. It’s telling, given the squeeze in the search business and the competitive moves by the two browser giants, that Google would bring out Chrome now.

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