Here's evidence that Microsoft isn't just up for challenging Google in the usual Web-search business, but in other  Google areas too: Like Maps. Bing's  just demonstrated some upcoming tweaks, and they'll make Google nervous.
Microsoft showed off its turbo-boosted Maps app at the TED conference, but as befits the intellectual theme of TED, it also posted a long and complex blog post about the matter. You can read it here , but it's absolutely gargantuan and delves into some of the complexities of ergonomics, man-machine interfaces and process mapping of how we interact with some of Bing's existing systems. Suffice it to say that the research folks at MS have really put their thinking caps on when trying to improve Bing: They're calling the new process of search "spatial searching" and they've broken it down into stages that match real-life searching. First is exploration, where you're just poking around in a particular area. Then there's discovery, where you use your senses to find cues that'll help you get a particular task done, and finally there's decision making, where you take all of this info and use it to achieve a goal.
MS explained how it had been improving Bing Maps to help with the "explore" segment of this, and noted how the existing Maps includes imagery from space all the way down to aerial photos. Which is, of course, exactly what Google does as well. But where Google used to have the lead with Street View, Bing now has "Street Side" too, which is almost the same thing. And now Bing's integrating user photos from Flickr into Street Side, leveraging images with geotagging and doing some clever image-matching to integrate them into its existing image database. The upshot being, of course, that instead of a static view of the area, you can see what it looked like at any particular time.
More impressively, MS can also integrate video into the views--and if someone's transmitting a live geotagged feed, it can even perform this trick in real time. That turns Bing Maps into an augmented reality tool, of course. This part is still experimental, so you won't be able to try it out. But the Flickr integration is live if you use a Bing Maps tool, even if it's still an ongoing research project so it's limited to a few U.S. locations, and a single-pass through Flickr's geotagged image database.
MS also revealed that soon you'll be able to try out Bing Sky, which does exactly what you think it might--it's a star-map, orrery, and space-exploration tool that'll integrate with Street Side to show you what the sky looks like overhead. The tech is driven by MS's own WorldWide Telescope project, and it'll roll sometime soon.
Essentially MS is building up Bing to challenge the full spread of Google's tech--Street Side sounds like a cleverer version of Street View , Bing Sky is close to Google Sky, and so on. Before you know it, MS will roll out their own Web-based email system, and chat  interface. Oh, hang on...