Google plans Chrome-based Web operating system

That Google operating system rumor is coming true--and it's based on Google's browser, Chrome.

The company announced Google Chrome OS on its blog Tuesday night, saying lower-end PCs called Netbooks from unnamed manufacturers will include it in the second half of 2010. Linux will run under the covers of the open-source project, but the applications will run on the Web itself.

In other words, Google's cloud-computing ambitions just got a lot bigger.

"Google Chrome OS is being created for people who spend most of their time on the Web, and is being designed to power computers ranging from small Netbooks to full-size desktop systems," said Sundar Pichai, vice president of product management, and Linus Upson, engineering director, in the blog post.

The move has widespread implications.

One is that it shows just how serious Google is about making the Web into a foundation not just for static pages but for active applications, notably its own such as Google Docs and Gmail. Another: it opens new competition with Microsoft and, potentially, a new reason for antitrust regulators to pay close attention to Google's moves.