I think they complement each other rather than directly compete with each other. I have all my files stored locally, but I also have them all uploaded to Google Music so I can listen to them on my phone. Even if Google Music shuts down, I have local copies.
This is the smart strategy. If you're that concerned about the hands you're putting your music in, then all or nothing isn't a good plan.
Instead, diversify and maintain. I use iTunes Match, Google Music and keep everything locally as well as a backup on my server. It all happens automatically when music is added to the local library. Nothing is lost, and redundant access is gained.
