Is Microsoft after Google's ad business?

Google's AdWords program is the complete reason for its financial success. The text ads that show up next to each Google search bring in billion of dollars in revenue every quarter. What had made them so successful? Google's search engine serves the customer with the most relevant search results as fast as possible -- and customers have noticed. This is why Google enjoys the search leadership position it does. Meanwhile, along for the ride is Google's bread-and-butter revenue maker, which also is very relevant to the consumer while being an "unobtrusive" advertisement.

Microsoft and Yahoo! have been blindsided by Google's success, but both are determined to get back in the game or die trying. But, is Microsoft so bold as to try and nip at Google's heels these days instead of Google taking ever-more market share in the web search arena? Some industry analysts think this, and postulate that Microsoft's commitment to use $2 billion to get a better foothold into web advertising is proof.

There is always a "first mover" advantage to any company who creates a certain market then continues to build brand awareness and dominate that market with a superior product. So, can Microsoft really lead up to worthy competition in web advertising with Google? I agree with the analyst statement that "The No. 1 threat to Microsoft is decreased relevance of its core products," which includes things like Web 2.0 technologies and Ajax Web development that simulates installed software in a web browser. With Google's "first mover" advantage and its willingness to try and position itself as the largest advertising network on the planet, does Microsoft have a chance?

[Disclosure: I own MSFT shares as of 4-27-07]