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Google sues the U.S. government in its ongoing 'cloud' battle with Microsoft [Updated]

November 1, 2010 |  3:14 pm

Intensifying efforts to build its e-mail and cloud computing business, Google Inc. has taken the federal government to court to change a bidding procedure that it says favors rival Microsoft Corp.

[For the record, 4:58 p.m.: An earlier version of this post said Google filed its lawsuit Wednesday. The lawsuit was filed Friday in the U.S. Court of Federal Claims.]

Google, which has been battling Microsoft across the country to gain a foothold in the $20-billion office software market, sued the U.S. Department of the Interior, alleging that it excluded Google’s bid to offer the e-mail system to the 88,000 employees throughout the agency.

According to the lawsuit, filed Friday in the U.S. Court of Federal Claims, the department specified that in replacing its older e-mail system, it would  consider software from Microsoft only.

“Based on the risk assessments and market research," the department said, Microsoft's system was "the only commercial product that satisfies every requirement identified by the department.”

For several years, Google has been battling to win territory in the global market for office and e-mail software, a sector Microsoft has long dominated with its Outlook and Office products.  The division of Microsoft that sells Office software, its largest unit, recorded nearly $19 billion in revenue this year.

To distinguish its offerings, Google has long touted its Internet cloud, an approach that stores customers' e-mail and documents in Google’s remote data centers rather than on servers operated by businesses themselves. The cloud approach allows major customers to save money by outsourcing their own in-house e-mail systems.

But Google has run into difficulties in its attempts to loosen the tight grip that Redmond, Wash., software giant Microsoft has on the e-mail market, which includes decades of relationships with some of the world’s largest businesses and government agencies.

Earlier this year, Google was frustrated in its efforts to offer its Google Apps e-mail product to the state of California, which ultimately chose Microsoft to serve e-mail to the state’s 200,000 employees.

Google, which had been engaged in a long discussions with the state over the contract’s security and usability requirements, ultimately opted not to submit a bid and complained about what it saw as a pro-Microsoft bias in the bidding process. The state expressed regret that Google did not submit a bid.

In the case of the Interior Department, Google alleged that it was in effect prohibited from making a bid in the first place and that department officials had quietly been opening the door to Microsoft before the bidding process even began.

The suit cites an April meeting between Google executives and William Corrington, the department’s chief of technology. The company contended that Corrington “informed Google that ‘a path forward had already been chosen’… and there would be no opportunity for Google to compete because its product was not compliant with DOI’s security requirements.”

Kendra Barkoff, an Interior Department spokeswoman, said the department could not comment on pending litigation.

-- David Sarno

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