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What determines variation in genome size, gene content and genetic diversity at the broadest scales across the tree of life? Much of the existing work contrasts eukaryotes with prokaryotes, the latter represented mainly by Bacteria. But any general theory of genome evolution must also account for the Archaea, a diverse and ecologically important group of prokaryotes that represent one of the primary domains of cellular life. Here, we survey the extant diversity of Bacteria and Archaea, and ask whether the general principles of genome evolution deduced from the study of Bacteria and eukaryotes also apply to the archaeal domain. Although Bacteria and Archaea share a common prokaryotic genome architecture, the extant diversity of Bacteria appears to be much higher than that of Archaea. Compared with Archaea, Bacteria also show much greater genome-level specialisation to specific ecological niches, including parasitism and endosymbiosis. The reasons for these differences in long-term diversification rates are unclear, but might be related to fundamental differences in informational processing machineries and cell biological features that may favour archaeal diversification in harsher or more energy-limited environments. Finally, phylogenomic analyses suggest that the first Archaea were anaerobic autotrophs that evolved on the early Earth.