Google doesn't compete with them for the desktop really. But desktop Linux distros do. Especially when it comes to gaming. Note that Valve pushes Linux a lot lately with their whole SteamOS effort especially. I think that's a major threat for MS who for a long time enjoyed an unchallenged position as a platform in PC gaming.
Latest Linux gaming renaissance eats at their confidence. For many gamers Windows is not seen as a requirement anymore, and they simply ditch it and start using better systems (especially because Wine became so good lately). While gamers are a minority amongst Windows users, MS still fears that dynamic because it breaks their network effect and creates the same effect in the Linux world.
Latest Linux gaming renaissance eats at their confidence. For many gamers Windows is not seen as a requirement anymore, and they simply ditch it and start using better systems (especially because Wine became so good lately). While gamers are a minority amongst Windows users, MS still fears that dynamic because it breaks their network effect and creates the same effect in the Linux world.