Google made some notable news yesterday—by doing nothing.

Company representatives did not appear on stage in a lecture hall at the corporate headquarters of chipmaker Qualcomm. Typically, this would be no big deal. Google isn't in the habit of doing such things. But earlier this month, Bloomberg reported that Google would somehow make its presence felt at Qualcomm HQ, in front of Qualcomm stockholders, offering its "stamp of approval" for a new kind of Qualcomm chip. That would have been a big deal.

Qualcomm is the world's largest smartphone chip maker, but this wasn't about smartphone chips. This was about chips for computer servers, the machines that deliver all those services and emails and other data to your phone from across the Internet. And if we're talking about Google—the world's largest Internet company—server chips are no small thing. But Google didn't show.

According to one person familiar with the matter who asked not to be identified because he wasn't authorized to speak to the press, Google was indeed slated to deliver some sort of message, but pulled out. It's a back-and-forth that shows how important the chip market is to Google, how important Google is to the world's chipmakers, and how both Google and all those chipmakers are so carefully working behind the scenes to tip the scales in their favor. That includes the chip industry's behemoth: Intel.

In delivering its many services, from Search to Gmail to Maps, to tens of millions of people across the globe, Google operates a network of data centers stretching from Oregon to Finland to Taiwan. Google engineers custom design the tens of thousands of servers that drive these computing hives. And Google buys all the chips for these servers directly from the companies making them. Right now, that means Google buys an enormous number of chips from Intel, the chipmaker that dwarfs all others. And we mean enormous. In late 2012, Intel bigwig Diane Bryant told us that Google bought more server chips than all but five companies on earth.

That's remarkable when you consider that everyone else on that list actually sells servers, including Dell and HP. Google builds servers only for itself. According to Shane Rau, an analyst with research firm IDC, Google now accounts for 5 percent of all server chips sold worldwide. Over the course of a recent year-long period, he says, Google bought about 1.2 million chips. So, if it looks like Google may start buying chips from someone other than Intel, industry insiders sit up and pay attention. Now that Google is serious about cloud computing—inviting the world's business to run all their software on its state-of-the-art infrastructure—its already massive slice of the chip market will only grow. As more companies move onto the Google cloud, they'll buy fewer servers from the likes of HP and Dell. Intel wants to keep that massive Googly slice of the market—while newer rivals like Qualcomm and Applied Micro and Cavium are looking to take it away.

But in the end, Google may take things in yet another direction. It may design its own chips.

Keeping Options Open

Google certainly has an interest in seeing other chipmakers challenge Intel's dominance. Today, according to IDC, Intel controls 99 percent of the server chip market. If Google can buy chips from more companies, prices are bound to drop. Simply by flirting with other players, Google can encourage Intel to keep prices down. But in addition to lower prices, Google may have an interest in server chips that are more like those that Qualcomm makes for smartphones—that is, chips that consume extremely small amounts of power.

You may think Google would need big beefy chips to run its sweeping Internet empire, but the trick to running so vast an operation is finding ways of breaking tasks into tiny pieces and spreading them across many modest pieces of hardware. That way, one failure doesn't really matter. The others can pick up the slack. Plus, this distributed model is more efficient. If you run an empire as big as Google network, you must keep costs—meaning power usage—as low as possible.

That's why Qualcomm is making server chips more like energy-sipping smartphone chips than the old-school energy-gulping variety. It knows Google is interested. It also knows that other Internet giants like Amazon and Facebook are interested. Facebook has made no secret of this. That's why Qualcomm wanted Google at its event: to show the rest of the Internet that the big dog was interested.

A Chip to Call Its Own

This isn't the first time Google has flirted with alternative chip architectures. And for years, rumors have swirled indicating that Google may end up designing its own chips. That isn't beyond the realm of possibility. After all, Google designs so much other hardware, from servers to storage systems to networking gear. And unlike Intel, chipmaker ARM will license its basic processor designs to anyone so they can further customize them. Qualcomm makes custom ARM designs. Google could, too.

Just this week, the rumors started flying again. Google contributions to an open source software project indicated that it has built its own chip, and some people got very excited. As it turns out, this is merely a chip for network interface cards—cards that connect servers to a larger network. Even if Google did design such a chip, it's most likely a small development. It's "unlikely to be much in the way of revolutionary architecture," says JR Rivers, who once helped design networking gear at Google and now runs a networking startup called Cumulus. These less sophisticated chips are quite different from a CPU, the chip that represents the brain of a server. But it shows how Google thinks about data center hardware: It's always looking to gain any advantage.

At the moment, server chips based on the ARM design are still maturing. Rau, the IDC analyst, says they account for less than 1 percent of the market, and at this point, he suspects, companies like Google are buying these chips only to experiment with them. "I don't think these chips are in major volume in big cloud companies—yet," he says.

So, Google is still very much dependent upon Intel for its processors—as much as Intel is dependent upon Google. That means Google must carefully balance the situation. It wants the Qualcomms of the world to succeed, to build ARM chips it can use in bulk. But it doesn't necessarily want to tick off Intel. Thus, this week's no-show. Right now, it's status quo. But the balance may shift.