Google announced this week a project it has been working on to develop a faster, more accurate, and more comprehensive search engine. The announcement of the project, code-named ‘Caffeine' (a clever play on words implying that the project will boost speed), seems a little out of character for Google which usually makes these sort of search engine tweaks under the radar. One thing that the announcement of Caffeine accomplished though is to divert attention away from Microsoft's Bing search engine and the Microsoft/Yahoo partnership news and put Google search back in the headlines.
I don't believe Google is feeling all that threatened by Microsoft's Bing, or even by the search/advertising coalition formed by the partnership between Microsoft and Yahoo. I think perhaps it should be, but I think that the hoopla around Caffeine has more to do with ego than paranoia. I think Google was tired of seeing headlines about Bing and Microsoft and Yahoo.
I also don't believe that Google launched the Caffeine project in response to Bing. A Google engineer, Matt Cutts, posted on his blog that Caffeine is simply part of the normal process of improvement that Google goes through on a regular basis. He clearly states that Caffeine is not a response to Bing and says "I think the best way for Google to do well in search is to continue what we've done for the last decade or so: focus relentlessly on pushing our search quality forward. Nobody cares more about search than Google, and I don't think we'll ever stop trying to improve."
Assuming that is true, it again illustrates that the public hoopla around Caffeine is more about getting attention than it is about rolling out any revolutionary change in the Google search engine. Matt claims in his blog that this is all just standard operating procedure at Google and the kind of thing that goes on all the time without generating any headlines.
That said, maybe Google is a little more concerned with Bing and the Microsoft/Yahoo partnership than they let on. Bing has garnered accolades and has been supported by one of Microsoft's more successful marketing campaigns. Experts and users alike concede that Microsoft seems to have gotten things right with Bing, and Bing has been slowly chipping away at web search engine market share. With Yahoo basically surrendering its share of the search engine pie to Microsoft, Bing could jump to 30% or even 40% market share. Google would still be in the lead, but Bing poses a reasonable threat to Google's established dominance.
Google is also spreading itself thin, taking on dominant players in multiple markets simultaneously. Google is now arch-rivals with its previous BFF Apple, and mortal enemies with Microsoft in almost every market the two operate in. The last thing Google needs is to have to defend its home turf of web search at the same time. Only time will tell how these battles will play out, but at least for now Google won the news spotlight back with Caffeine.