And from the battle of the economy to the battle for the future of IT.

The war between Microsoft and the pretender to its throne Google has reached new heights, with three major announcements coming during the last few days.

The first two strikes came from Microsoft. First off, it revealed a new feature for Internet Explorer called InPrivate. The feature enables web browsers to visit web sites without disclosing this information. It means users can browse in private, which is potentially bad news for Google. At least that is how the press have described it.

Google recently bought advertising network service DoubleClick. As a result, or so goes the argument, the company will know less about the browsing habits of its customers, and so will target its ads less effectively. Both the FT and The Times ran big stories explaining this earlier this week. However, some have argued that this argument is overplayed, that actually Google does not acquire information in this way, and this particular Microsoft move will have a neutral effect on Google.

But then, Microsoft revealed a $486 million purchase of online price comparison web site Ciao.

Microsoft said in a statement: “The acquisition signals a further milestone investment for Microsoft in Europe and will see Microsoft increase its European commercial search capabilities as part of its intent to make Microsoft Live Search the premier destination for consumers looking to research and purchase goods and services online, as well as enable merchants to drive greater online sales.” Ummm, so that seems pretty well aimed at Google, then.

Then this morning Google struck back when it announced plans for its own web browser.

Apparently, Google has been struggling to make its own word-processing and spreadsheet tools work effectively using Internet Explorer. If users instead use the Google browser, Chrome, then this problem will be solved.

Above all, Google is vexed by the idea of its big rival controlling the web browser. Anti-trust suits notwithstanding, it fears Microsoft could in some way make its browser favour its products.

It’s all good news, of course, for us. As the two titans roar at each other, we see more choice and cheaper software.

People fear monopoly, but no monopoly lasts for ever. In the short-term, a giant such as Microsoft may have such a stranglehold on the market that other companies struggle to compete, but in the longer-term new ideas win through.

At the beginning of the last century, the economist Alfred Marshall drew up a list of the top 100 companies. So large and powerful were the companies on Marshall’s list, he argued that they would probably survive indefinitely. He referred to them as the Californian Redwoods – trees that can live for so long that to us humans, with our short life-span, they practically appear immortal. Redwoods have in fact been known to live for over 2,000 years.

But in 1999, the economist L Hannah revisited the Marshall list, and discovered that of the 100 largest firms in 1912, 29 had, by the time of the study, gone bankrupt, 48 had disappeared, and just 19 of them were still in the US top 100.

Even the mighty fail, eventually. The war raging between Google and Microsoft illustrates why this is so. Microsoft may of course win through, eventually, but this outcome is far from certain – in the meantime it is being forced to innovate – just to survive.