According to the New York Times, Google has a serious problem with the fact Microsoft's new IE 7 browser has a box in the upper right-hand corner that sends people to MSN search. Google claims this could give Microsoft an advantage in attracting Web traffic and advertising revenue. Whether Google's concerns are justified is left to be seen but it does offer more evidence Google will eventually launch its own Web browser. As the world's leading Web services company, it makes little sense not to own the "operating system" used by consumers when they go online. Why let the evil competition control how people get through the doors when you can have your own door, right? Of course, it could be argued that Firefox is Google's de facto browser but Google doesn't own or control Firefox. In an idea world (at least according to Larry Page and Sergey Brin), a Google browser would likely offer easy, one-click access to Google services such as search, GMail, Talk, Writely, Finance etc. So let's turn around the question and ask why Google hasn't launched a browser yet? Why has it focused on me-too services (blog search) and small, strategic acqusitions when a browser seems like a no-brainer? It's difficult coming up with solid reasons other than perhaps Google believes Firefox can meet its needs with some financial and other support. But if you read the tea leaves (and some of the quotes in the NYT story), it is difficult not to get the impression Google's could jump into the browser market as a means to protect its search business from Microsoft. For more views, check out Nicholas Carr and Nial Kennedy.
Update: Check out Explorer Destroyer, which provides details on how Google is offering people $1 for referring IE users to Firefox.