Until GOOG approaches MSFT's revenues, I don't think Microsoft will worry. If there's a 'war' between those two companies, Microsoft is probably handling it as one of attrition.
Google has one strong source of revenue (search advertising) and has been thrashing about for years in an attempt to build at least a second source without notable success.
Microsoft has many different sources of revenue and continues to build on each. To take out Google, all they have to do is have Bing, Yahoo and the rest patiently chip away at GOOG's search advertising dominance by a few percentage points each year and that revenue will dry up. Then, without that revenue, all of Google's vanity projects will collapse in a heap.
Google's many projects remind me of the Flying Lawnmower: http://www.youtube.com/watch?v=kNWfqVWC2KI
You can make anything fly if you have a strong enough engine shoving it and Google's engine is its search advertising revenue. Once that revenue decreases enough, their lawnmower will fall to earth, and Microsoft is surely happy to see them tack on new expensive doodads like YouTube and Chrome O/S to hurry that day forward.
