Microsoft and Google are two of the biggest tech companies in the world, competing on multiple fronts, but the older company is coming out ahead where it matters.

Microsoft and Google are the number two and three cloud providers in the world, behind market leader AWS. The companies operate the two largest search engines, and both companies have their own adverting platforms. In addition, the companies compete on computer operating systems, as well as office suites.

With so many points of competition, it’s hard not to compare the two companies, and it would be easy to believe Google is the more innovative, nimble, and forward-thinking of the two. When looking at multiple factors, however, it quickly becomes clear that Microsoft is continuing to outpace its younger rival.

Betting Big and Acting Entrepreneurial

Google CEO Sundar Pichai sent a memo to employees saying the company needed to “be more entrepreneurial working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days” in the face of an economic downturn.

Despite Pichai’s desire to see Google be more aggressive, the company was outmaneuvered by Microsoft in scoring Netflix as an advertising customer, in spite of Google being considered a front-runner for the contract. One of the prime reasons Google lost out was because it was too conservative in its offer, fearing it could eventually lose Netflix as a customer if the company ever decided to take its ad endeavors in-house.

The result? Netflix found Google’s offer “underwhelming.”

To be clear: Google lost out on one of the biggest advertising deals because its leadership was afraid of something that might happen at some unknown point in the future.

In contrast, Microsoft approached the deal with a much more optimistic outlook. Rather than focus on something negative that might happen down the road, the company’s executives looked at the Netflix deal as an opportunity to get their foot in the door and possibly score much more business from the streaming company down the line.

“What I see is Netflix is testing the Azure/Microsoft waters with a feature or two first,” a Microsoft employee said.

Of these two approaches, which one seems more entrepreneurial? Which one has a greater sense of urgency? Which company is acting like a nimble startup versus a stodgy, risk-averse corporate entity?

Human Resources

Another area where Microsoft is outpacing Google, and much of the tech industry at large, is how it handles human resources.

In the past couple of years, Google has stumbled from one HR disaster to another. The company infamously fired one of the world’s most respected AI ethics researchers, leading to widespread condemnation from across the industry, AI researchers rejecting the company’s funding, and a high-profile conference rescinding Google’s sponsorship. Rather than learn from its actions, Google has continued firing AI researchers under controversial circumstances, even appearing to go against its own guidelines for handling such matters.

The company has also suffered a number of recent legal setbacks, including settling a wage and gender discrimination case for $118 million. That case followed another one in 2021, where the company settled for $2.6 million over claims it discriminated against women and Asian contractors.

Google has also refused to raise pay to combat inflation and is increasingly dealing with employees that are unhappy over their compensation.

A National Labor Relations Board ruling also shed light on Google’s Project Vivian, a top-secret anti-union effort within the company.

In contrast, Microsoft has proactively revamped its HR processes, implementing some of the industry’s most progressive policies. For example, Microsoft is now one of the most transparent companies in the business when it comes to employee and executive compensation.

The company has removed noncompetition clauses and lifted NDAs that prohibit “workers from disclosing alleged conduct that they perceive is illegal discrimination, harassment, retaliation, sexual assault, or a wage and hour violation occurring in the workplace.”

Microsoft also hired an outside entity to perform an independent civil rights audit of the company’s practices. Company President Brad Smith says Microsoft is so focused on treating its employees well and addressing their concerns that “employees will never need to organize to have a dialogue with Microsoft’s leaders.” In spite of that sentiment, Smith says the company is committed to an open dialogue with unions, should its employees choose that option.

Company executives have engaged in exhaustive and innovative research to better identify what makes for happy employees in an effort to better serve its workers.

Microsoft has also doubled its salary budget in an effort to pay its employees more, in addition to awarding more stock options.

Again, which company is acting more entrepreneurial? Which company is more progressive and forward-thinking in its outlook?

Hybrid and Remote Work

Closely related to the second point, hybrid and remote is another area where the two companies are diverging.

Google has repeatedly angered employees over its return-to-office (RTO) policies.

In contrast, Microsoft has taken a much more open-minded approach to remote work, with CEO Satya Nadella saying companies shouldn’t be dogmatic about in-office versus remote work.

Jared Spataro, Corporate Vice President for Modern Work, has even said that “going forward, the digital employee experience is the employee experience.”

Google’s response to such an enlightened approach? The company has opted to reimburse employees for electric scooter rentals to make the required commute to the office easier.

Again, which company is more nimble? Which company adapting to the times and changing circumstances?

Conclusion

While Microsoft and Google are both massive companies, with neither going anywhere anytime soon, one company is clearly firing on all cylinders. The other company, in contrast, seems to be stumbling from one troublesome issue to another, many of its own making.

In the end, Microsoft is running laps around Google in many of the ways that matter most, continually reinventing itself despite being far older and more established than its rival.