Last week, Google, a company renowned for its search service, released the Google Desktop, a software program that lets users search through materials stored on their own computers, from e-mail to Word files to recently browsed Web pages. The Desktop is Google's first major foray onto the desktop, and its release may mark the beginning of the end of Microsoft's dominance of that territory. This developing challenge may confound those who have argued that Microsoft had a permanent, unassailable monopoly, which could only be weakened by government intervention. Perhaps someone should tell the trustbusters in Washington and Brussels that technology markets are working-and that their services are no longer needed.

Misplaced Files

Desktop search is one of those ideas that have been around forever that no one could get to work right. Ever used the file search function in Windows? It takes forever, just like searching for messages in Outlook. Finding things on the Internet is easy, but finding things on our own computers often seems impossible.

Microsoft has been talking about desktop search for some time and has promised to include a database-driven file system in Windows for over a decade. But the system Microsoft was developing was cumbersome, requiring users to "tag" files with all sorts of identifying information, such as the file's subject, its intended recipients, keywords, and so on. As a result, the feature was recently bumped from Microsoft's forthcoming upgrade of Windows, and probably will not be released before 2010, if ever.

Google's approach to the same problem was elegant in its simplicity. Just like a Google web-search, users can simply type in a keyword or two when they search. Google then gives results that are generally sensible. Hiding a boggling complexity behind its clean interface, Google demands very little of its users.

So as Microsoft wrestled with its complex system, Google leapfrogged the company with a desktop search tool based on the Google sensibility. As happens so often in the famously dynamic technology market, Google seems to have provided a long-awaited, useable application of ideas that have been floating about for years. No surprise, most analysts expect the Google Desktop to be wildly popular.

Bundling It Together

Critically, this new search software positions Google to make even deeper forays onto the desktop. Because of other technological advancements-specifically the rise of "web standards," which are sets of rules that make it easy to create sites with desktop-like functionality that work on all browsers-it is now routine to develop new applications that are based on the Web, rather than on the user's PC, and thus do not need Windows.

The most common example of such Web-based services are e-mail systems such as Hotmail and Google's own "Gmail," which are alternatives to standard e-mail systems that run directly on a PC on top of a desktop operating system. Today, many applications can be run over the Web.

Google is well situated to take advantage of this trend. Ironically, it may do so by bundling services together, much as Microsoft itself bundled services within Windows (to the ire of antitrust regulators). Google is already rumored to be developing a browser of its own, to compete with the now-dominant Internet Explorer. This in turn could be integrated with its desktop software, Gmail, and other applications to create a powerful, Web-based challenger to Windows itself. And just as Google's Search Bar updates itself without any user intervention, Google's new software could do the same, bringing users new functionality instantly, without the hassles of downloading and installation.

Google, of course, is not the sole threat to Windows. Many other major players, from IBM to Sun Microsystems, could also take a shot at the Microsoft monopoly. Google may be in the catbird seat now, but in a world where the operating system is not essential, the possibilities are endless.

Of course, Microsoft will respond competitively. Among other efforts, the company is rumored to be constructing a lightweight desktop search program for the next version of Windows. Users will benefit from this competition, as they did from the "Browser Wars," but what will the trustbusters think?

Lessons for Regulators

The lessons to take from the Google Desktop is that the markets have ways of dealing with monopoly and that market dominance may be much weaker than it appears when markets are shifting and churning, as they always are. Those who argued that only antitrust intervention would break Microsoft's dominance may soon be proved wrong.

Andrew Grossman is Senior Writer, and James Gattuso is Research Fellow in Regulatory Policy in the Thomas A. Roe Institute for Economic Studies, at The Heritage Foundation.