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The gloves are off in the battle between onetime friends Google and Yahoo!, with each of the companies rolling out upgrades, feature changes and alliances that indicate both firms are fiercely competing for eyeballs.

The portal wars that dominated the Web in the late 1990s are back, it seems. Google has approached the point where it can no longer be thought of as simply a search firm, while Yahoo! is striving to become more search-oriented in its strategy.

In addition to vanilla Web search, Google already provides news aggregation, image search, product listings, webmail, blog hosting, "social networking" and language translation.

Last week, the company made another attack at Yahoo!, launching a beta of Google Groups 2, which looks a bit like Yahoo! Groups. The first Google Groups was merely a web front-end to Usenet, albeit with the largest archive available anywhere.

Google is even veering away from its light text-only roots, having decided to let advertisers deliver graphical ads via AdSense, which serves currently text ads to third-party websites. The company will not show the ads on its own site, yet.

Yahoo is fighting back with upgrades to its own features. Notably, the company last week upgraded the amount of storage it will give to users of its free Yahoo! Mail service to 100MB, in response to Google's new Gmail, which offers 1GB.

Also, possibly another response to Gmail, which places ads next to email, Yahoo! has made a deal with Plaxo that will let it embed Yahoo! Search into Outlook and Outlook Express email client software for the first time.

Plaxo provides an Outlook plug-in that helps people manage their contacts books. Version 2.0 of the software, set to ship this month, will contain the Yahoo! search button. Yahoo! will share any search-related revenue with Plaxo.

If Google is becoming more like Yahoo!, Yahoo! has for some time been trying to become more like Google. Its Yahoo! Search was revamped last year to appear cleaner and more Google-like, and the firm has repeatedly said search is core to its strategy.

Search is core to both company's financials too. Ads triggered by keywords found in search terms account for the majority of both portals' revenue.

Yahoo! and Google are not the only two firms vying for these search dollars of course. Ask Jeeves' ask.com site is now the purest search play of the major online brands, although three other newly-acquired sites, including excite.com, are portals.

Microsoft, of course, is still in a dominant position with its MSN network of sites. This dominance is only likely to increase, after the company releases its own search technology onto the Web, into the browser, and potentially into Windows.

Source: ComputerWire/Datamonitor

Related research: Datamonitor, "Secure web portals and web services" (BFTC0803)

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