It's a false choice, in part, because neither Google nor Microsoft can come to the argument with clean hands. Google's open source efforts are mainly done under Apache licenses, which don't require they be shared. It does not support the AGPL.
Its catchphrase to "do no evil" is like the Declaration's statement that "all men are created equal." It is an aspiration. Reality is different.
Schmidt is playing with open source here much as politicians have been playing with race, religion and gender. By creating a phony "either-or" choice they create majorities and minorities.
But open source is about consensus.
Consensus is when we all agree to agree, then build from there. Even Microsoft has been forced, lately, to bow to consensus. Its Open Specifications Promise may be pie crust, but that's more than we've had before, and that's progress.
Microsoft's machinations around Office Open XML, which continue, are all aimed at offering reassurances that a proprietary standard need not be treated as one. True or not, they are at least trying to appear less evil.
They are doing so because the Internet consensus has power. That power is more important than any single vendor's commitment to it.
Business competition is inevitable. Neither the Internet nor open source are guarantees against it. Both offer a level playing field in which everyone's evil becomes relative, and no one has the power to make it absolute.
Not Microsoft. Not Google. And that's not a pie crust promise. It's a promise we can build on.