Microsoft and Google are currently readying themselves for a battle that could very well alter the way companies within the computing industry compete, as well as how the world employs information technology, The New York Times reports.\u201cThis is hypercompetition, make no mistake,\u201d said Bill Gates, Microsoft\u2019s chief software architect, in an interview last year, according to The Times.The rivalry between the two tech titans is heating up, and neither Microsoft nor Google will be waiting around to see what the other does next. Just last Thursday, Microsoft said it would significantly bump up its spending in 2007 to roughly $2 billion more than previously predicted, The Times reports. Analysts say much of that increase will be devoted to countering the threat posed by firms\u00a0such as\u00a0Google that offer advertising-supported Web services and software, according to The Times.Richard Sherlund, an analyst with Goldman Sachs & Co., told The Times, \u201cMicrosoft doesn\u2019t have to kill Google, but it has to narrow the gap.\u201dIn other words, if Microsoft wants to keep its head above water, it needs to bolster its presence in the Internet software and services space.Both companies have their own distinct advantages moving forward. Microsoft\u2019s market-leading PC software business lends the company strong footing, and Google\u2019s unique insight into the world of Internet services gives it an upper hand, according to The Times.The Web business model offers search, e-mail, calendar, contacts and word-processing capabilities that can be accessed remotely via any PC, handheld or other device that has a Web browser, The Times reports. In the past, Google has created new services or functions, offered those services free of charge, and then only after that service goes live does the company determine a way to profit from it via advertising, according to The Times.Such ad-supported, Web-distributed software challenges the way Microsoft has sold licensed desktop software in the past, at least on the consumer level, The Times reports. Some small companies think Google\u2019s strategy gives it a similar competitive advantage to Microsoft\u2019s bundling of more and more software applications and features into its Windows OS, according to The Times.Google\u2019s method of buying companies and then offering their products or services for no charge has left those related markets in disarray, The Times reports.\u00a0For example, Google recently offered free versions of SketchUp\u2019s sketching software and Urchin\u2019s Web metrics product after purchasing both firms, according to The Times. Google also recently won a contract to provide free wireless Internet access to San Francisco\u2019s residents, in which it plans to profit from local advertising, The Times reports.Google is also attempting to make inroads into Microsoft\u2019s main market with its recent acquisition of Internet-based word processor Writely, according to The Times.It\u2019s unclear what effect that purchase will have on the Redmond, Wash.-based software giant, but Microsoft is worried that Google could become a sort of dominant\u00a0OS of the Web, the way its Windows OS owns the browser space, The Times reports.John Battelle, editor of search technology Web log, SearchBlog, told The Times the whole ordeal boils down to the quality of the each company\u2019s offerings. \u201cIn the long run, it\u2019s all about whether you have the best service,\u201d he said.For related news coverage, read Google Searches for Fight With New MS Browser.This article is posted on our Microsoft Informer page. For more news on the Redmond, Wash.-based powerhouse, keep checking in.Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.