Google Inc. (NASDAQ: GOOG), already nipping at Apple Inc. (NASDAQ: AAPL) on multiple technology fronts, is prepping to take on the Cupertino, Calif., company in their strongest division: digital music and sales. Call it hubris or say it’s just crazy enough to work, but Google is starting up their digital music store. Features include offering affordable downloads and a cloud-based “digital song locker” that allows users to access their music library from any device.

With Apple’s iTunes service poised to control over 70% of the digital music market by spring 2011, should Google shareholders be concerned that the company is fighting an impossible battle? Or does Google have what it takes to topple Apple’s monopoly of the downloadable music world?

According to a report from Reuters’ Yinka Adegoke citing “people familiar with the matter,” Google has been meeting with music labels to discuss their involvement with the new, unnamed music service. Heading up the downloadable music store and service is Google Vice President of Engineering Andy Rubin, who is aiming to have Google’s new service launched by this Christmas. With the holiday season right around the corner though, it’s a concern that Google has yet to sign any agreements with music labels.

While no ink is drying on the paper yet, though, labels are reportedly very excited about generating legitimate competition in the digital music market. The biggest selling point for Google’s proposed service is its cloud-based storage of a user’s music library. Giving users access to their library not just on a home computer or laptop but through mobile devices powered by Google Android like Motorola (NYSE: MOT) Droid phones will make music purchases through Google’s service very appealing to users accustomed to iTunes restrictive downloading. Apple was expected to announce a cloud-based streaming option for iTunes users based on the technology acquired from website Lala, but cloud storage was not a feature included in the new iTunes 10.

Discerning investors might recall that Google Tunes mastermind Andy Rubin was the man behind Google’s mobile operating system Android. Andorid has notably created significant inroads for Google in another Apple-dominated market, namely mobile phone operating systems. According to a recent report from Quantcast, Android has stolen away 17% of Apple iOS’s control of the mobile operating system market in the past twelve months, across all mobile devices from smartphones to tablet computers.

Google isn’t the only company looking to take on Apple. Microsoft (NASDAQ: MSFT) is still trying to find success with their Zune service. The latest effort will be the Zune brand’s incorporation into this fall’s Windows Phone 7 platform and device. One time music business giant Sony (NYSE: SNE) will be launching a brand new streaming music service, Music Unlimited, later this year. Music Unlimited, unlike Apple and Google’s services, will be purely streaming based, offering music through Sony devices like Blu-ray disc players and the Playstation 3 gaming console. While it’s questionable whether or not Microsoft or Sony have a chance against Apple’s iTunes, Google’s past victories prove the company is business savvy enough to take on Steve Jobs’ powerhouse. If Google’s new music service can ride the growing success of the Android operating system, Apple’s rule of the digital music world may be over within just a couple of years.

Undoubtedly good for music labels, perhaps not so good for Apple investors.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.

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