The recent OOPSLA 2004 conference featured a panel, "The Great J2EE vs. Microsoft .NET Shootout" The speakers were Don Box (Microsoft), John Crupi (Sun Microsystems), Rob High (IBM), Anders Hejlsberg (Microsoft), and Alan Knight (Cincom). See "Programming Legends Debate .Net, J2EE"
WebSphere Journal (biased towards Java? Nah!) has captured some of the more memorable quotes that were said in the article "Microsoft's "Java Envy" Is Undeniable, Don Box Admits." This is something Don has talked about in this blog. Now Microsoft's paying attention: "Does Microsoft Have Java Envy?"
I was there. Honestly, each side had nice things to say about the other. Each technology is influencing the other. The main difference is that Java is a federation of separate companies and individuals who thus debate alternatives in public, whereas .NET is run by one company ("the big house") which debates alternatives in private. The debate on where to go next is happening with both technologies; we just don't hear about the private conversation we're not invited to.