Microsoft is making MSN Search the default search service for IE7. Microsoft denies that this default setting is unfair to MSN’s competitors, stating that the search box can be easily redirected by consumers to use other search engines.

Google and Yahoo! though appear to be unhappy with Microsoft’s move. Both have made public statements that appear to be directed against Microsoft’s browser plans. Google has gone so far as to announce that it has spoken recently about the matter with the U.S. Justice Department.

What Microsoft does with Internet Explorer is important, of course, because of Microsoft’s huge share of the browser market — variously estimated at around 80% to 85%. But, by itself, browser market share has no real value. The value is in the browser as gateway. With a keyword search-generated advertising market of, according to the Interactive Advertising Bureau, over $5 billion for 2005, and growing, on the other side of the search box gate, it’s not surprising to see Microsoft jockeying for advantage. But so are its rivals.

In the fight over advertising revenues, the real fight, the numbers are a bit unusual. Suddenly, Microsoft isn’t in its normal position of unassailable dominance. In fact, with, according to comScore, a March 2006 search engine market share of only 13.2%, third place to Google’s 42.7% and Yahoo!’s 28.0%, Microsoft’s MSN looks almost sad.

With real money at stake this time, the new browser wars undoubtedly will be fought on all fronts — legal, technical and marketing. Despite Google’s early salvos concerning antitrust, the courts may not be the primary theater this time around. Google and it’s allies are sure to have learned from the ultimate failure of Netscape’s campaign, that victory in court, because it can take so long and be so ultimately indecisive, can be truly Phyrric. The new browser war is likely to be most fought by other means.

The technical field too shapes up to be interesting. Google and Yahoo! may be able to make it easier for its customers to replace MSN as IE7′s default search engine. Or maybe Google, as is so often rumored, may actually launch a rival web browser. But the technical battle too is likely to be a sideshow.

The real battle will be in the market, with at least three players, Microsoft, Google and Yahoo!, having the resources to put up serious fights. We can expect aggressive marketing campaigns both on and off the Net. With many web browsers loaded on new PCs by their manufacturers who can themselves change the default search engine on machines they ship, we can expect major bidding for the right to be Dell’s or Hewlett-Packard’s featured search engine. Search engine advertising rates almost certainly will be affected too, with fluctuating search engine market shares likely driving down rates.

The new browser war is good news for consumers and for advertisers. A vigorous contest should lead to increased innovation, increased choice and lowered prices. May the war be protracted and bloody. Let’s just hope nobody wins.

Aside from the massive amount of impressions the space garnered in that short period, Firefox became an object of desire and speculation from simply becoming the first third-party advertiser on Google’s front page.

“This promotion is an extension of the Firefox referrals through (the) AdSense program we announced last year,” Sony Boralv, a Google spokeswoman, told CNET News.com. “Google is promoting Firefox with Google Toolbar because tabbed browsing and safer surfing help provide our users with a great search experience.”

Yet, with their history of competition with rival web giant Microsoft, Google’s motives with the ad appear to carry some venom. The January launch of Google Pack initiated the site’s endorsement of several applications which directly compete with Microsoft’s product line, including Firefox’s toolbar. Google may very well have been anticipating Microsoft’s inclusion of a similar toolbar in their upcoming update of Internet Explorer.