Benjamin Romano at the Seattle Times reports that Microsoft "plans to plow perhaps $2 billion more than expected -- a meaningful sum even for the world's largest software company -- into new technologies, marketing for its most significant wave of product launches in a decade, and the fight for online supremacy against Yahoo! and Google."
This spending is an explicit part of Microsoft's strategy in the search war. In a Fortune article, Microsoft CTO Ray Ozzie said that the cost of building these massive online clusters is a huge barrier to entry and that "the people who could build a viable [Web] services infrastructure of scale are companies that have both the will and the capacity to invest staggering amounts of money."
Microsoft is trying to build a Google-sized cluster, belatedly recognizing that massive computing resources are "major force multipliers" for those who have them and an insurmountable barrier for those that do not.
As Ozzie said, few others have the resources to build this massive online computing infrastructure. Who else can build, maintain, and exploit a cluster of millions of servers? Who else can spend the billions required? Not Amazon. Not Ask. Not any venture-funded startup. Probably not Yahoo.
The search war is now an arms race. The buildup in computing power for the battles ahead will be remarkable to watch.