It’s been obvious for a while, but it took the release of “Google Latitude” to finally shock me into conscious awareness. Google is now the Microsoft of internet services. (Microsoft remains the Microsoft of desktop software. Apple hopes to be the Microsoft of smart phones.)

I’m not referring necessarily to full-on bring-in-the-DoJ monopoly here, but to a level of leadership in market consciousness, and the bottomless pockets, that allow for a form of monopolistic behavior. I remember reading articles in the late nineties about the death of innovation in desktop software, and one of the factors blamed was the “Microsoft effect” – investors stopped supporting innovative new desktop software out of fear of Microsoft. Microsoft would allow you as a third-party developer to have a neat little application, to write some shareware, but if you invented anything strategic of of potentially large market, Microsoft would make its own version, inferior at first, but would eventually crush you and take your market.

And now we have Google, doing the same thing. It’s been a while since Google brought out anything truly innovative, but they sure have shown themselves willing to copy the services of upstart companies and try to snatch their markets away. Sometimes they win (Google Docs) and sometimes they lose (Google Video, Orkut) but this kind of aggressive barging in will eventually dry up the investment ecosystem for web services.