Deep pockets versus deeper pockets. Google's market cap is $125b and Microsoft's is $200b. Not long ago, the gap was larger. Falling PC sales have taken a bite out of Microsoft's revenue. They recently had their first down quarter in their history.
Microsoft still makes 4X the money Google does, though. In 2008, Microsoft earned $17b in net income compared to Google's $4b. Now, $4b is nothing to dismiss, especially when you're using and writing entirely free and open source software, but still, if Google has deep pockets, Microsoft's are even deeper.
See: MSFT and GOOG
Google is probably the only company in the world that can generate excitement about a new OS, and making an open platform will encourage software developers to write apps for it. Hasn't that been one of the big complaints, the lack of software for Linux?
Many have tried taking down Microsoft. All have failed. Perhaps Google is finally the David to slay Microsoft's Goliath. Perhaps not. Exciting times, these are.