It's November 2004, and a visitor to Google's Mountain View headquarters is mesmerised by a small board dangling above the company's reception area. Randomly selected and "de-pornified" search keywords flash across the board as millions of users around the world seek links to precious information mostly concerned with words like "Britney" and "Paris".

"How did we ever survive before we could do this?" the visitor turns and asks.

Considering that was less than 10 years ago, most would agree the answer is "pretty well". Despite this, Google's worth continues to soar to dizzy and quite possibly unsustainable heights. It's growth harks back to the ultimately doomed tech-boom of the 90's.

A bold statement? Perhaps, but then again, perhaps not. Consider this: Google is now worth about the same as AOL Time Warner. That's around US$80 billion (AU$106 billion). Still not getting it? That's TWICE the combined worth of Ford Motor Company and General Motors.

Yahoo, by contrast, is worth around US$46 billion (A$61 billion). Considering both companies' revenue figures are in the same ballpark, some may well ask how Google can maintain its spot as top-dog.com of the Nasdaq. Its only major advantage over Yahoo seems to be that it's become a verb.

So now they're going head to head. Google has embraced instant messaging with Google Talk, and Yahoo has taken on widespread contextual advertising with its new publisher network. Yahoo has even "Gmailified" its own Web mail product by improving its mail search function.

Ignoring for a moment the fight for dominance in the US, both companies face challenges in the Australian market. NineMSN, the partnership between Kerry Packer's PBL and Microsoft, remains a major stumbling block for Yahoo.

"The media landscape down there is extremely concentrated," John Marcom, Yahoo's senior vice president of international, told ZDNet Australia at the company's headquarters in Sunnyvale, USA. "The fact that the number one online company and the number one offline company are in a joint venture creates a big set of challenges."

Packer's clout with the ad-buying community in Australia, combined with Microsoft's reach, doesn't make it easy for other players. In addition, Packer's Nine Network "has given them some promotional heft as well," Marcom says.

Describing Australia as the market "where I would really like to relocate myself," Marcom admits Down Under was a country Yahoo wasn't "ruthless about prioritising".

Australian broadband providers' reluctance to partner with Yahoo is another frustration for the California-based company. Yahoo has broadband tie-ins to SBC in the US and British Telecom in Europe.

"You can date someone, but if they don't want to get married, you can't get married," Marcom says. "The big incumbents are the most biased to think they can do all of this alone."

Things move faster in the UK, US and Canada, Marcom says, but he's convinced the big players in Australia will come around.

For now, both Google and Yahoo seem concerned with drawing as many users onto their sites as possible. For Google, that meant the launch of Gmail, a clean, searchable mail service offering a gigabyte of storage. More recently, it meant the launch of Google Talk.

Ah yes. Just what the world needed. As millions of netizens start their browsing every day by loading up a unified messaging program to access their Yahoo, MSN, AOL and ICQ instant messenger accounts, they often pause. They pause to pray for yet another company to launch an IM service at least one friend will use, forcing them to join as well. Google has answered their prayers.

For its part, Yahoo's grab for users has most recently involved the acquisition of family-focused photo sharing site Flickr.com. As with Google Talk, it's a way to capture users and figure out how to make money out of them later. "Come for our Flickr, stay for our shopping," says Brad Horowitz, Yahoo's director of media search.

But unlike the 90's, if you build it, they will come, says Horowitz's protégé PhD student Dana Boyd. "The first round of the Internet was about getting e-mail ... and it was a very small population engaged with it," she says. "Now that we have everybody online, they're still using e-mail."

Yahoo's grab for revenue should worry Google more. Its publishing network is a service nearly identical to Google's AdSense DIY online ad kits. AdSense is behind those "Ads by Google" boxes you see on every second Web site you visit. Considering around half of Google's revenue comes from AdSense, it's obvious contextual advertising is a large and growing market; one that Yahoo's keen to get in on.

Beyond immediate revenue grabs, the next phase for Yahoo is to capture more of the increasing amount of hours users spend online, doing everything from uploading pictures and blogging to chatting and reading news.

The last part has media executives the world over very nervous indeed, and tech execs licking their lips. Given the convenience and cost effectiveness of peer-to-peer video distribution -- a headache for TV networks and movie studios -- and the success of online advertising finally being realised -- a headache for newspaper advertising sales staffers -- the Big Players in media are getting jumpy.

"I'm a great believer in new technology, and I think new technology is a very scary space for newspapers," James Packer told a press conference recently. It was a not-so-subtle indication that PBL has little interest in acquiring newspaper publisher Fairfax if cross-media ownership laws are loosened by the Howard Government.

While Yahoo insists it's interested solely in partnering with media outlets, it and others like it may well branch out into content generation in the future. Even the opinion of the company's own executives seems split.

As for the old staple of search engines, you know it's old hat when even Microsoft can do it right. Basic Web searches are no longer a differentiator. Google's approach is to keep tweaking its searching algorithms, while Yahoo is enlisting the help of a Hollywood friend.

The company's new, personalised search technology will allow users to search their friends' indexes of recommended pages and their friends, and their friends, etc. Called MyWeb2, it's like the Six Degrees of Kevin Bacon game, but for the Internet.

"The joke that I [make] is that Jerry and David (Yahoo's founders) started by personally using their expertise to index the Web, now we're going to get a couple hundred million people to help them," Horowitz explained.

The MyWeb2 concept will help to eliminate what Horowitz describes as "Oprah's Book Club syndrome", where the most popular Web-sites stay at the top because they're the most visible in search engine lookups. Manual indexing should help to break the cycle, Horowitz hopes.

If Yahoo gets traction with alternative search technologies like MyWeb2, investors may start to question Google's hefty market capitalisation. And if Yahoo's new publisher network manages to gradually shave away market share from AdSense, Google's rapid growth could slow. Either way, we have a battle on our hands.

Patrick Gray travelled to California as a guest of Yahoo.