In its most direct challenge yet to rival Microsoft Corp., Google Inc. (GOOG-Q402.495.861.48%) is developing an operating system for personal computers based on its Chrome Web browser.

The move heightens the competition between the two technology giants as Google tries to hit the competition’s most lucrative business. Microsoft’s Windows operating system is the basis for the functions of most of the world’s PCs, with about 88 per cent of North America’s market share.

Google is looking to attract a large initial audience accustomed to its brand and ease of use when the operating system is launched in the second half of 2010. Read the full article here.