Unwittingly perhaps (or necessarily), Microsoft has just done Google a huge favor. By virtue of Microsoft delivering a reasonably competitive search engine, Google is now in a much better position to show that they are not a monopoly. Back in the old days, IBM, then Microsoft liked keeping Apple around for the same reason.
Conversely, Google has completely dropped all pretext of its former hesitancy to tread directly on Microsoft's turf, releasing operating systems, mobile devices, browsers, hosted office applications, and working to obsolete Exchange (Google Wave).
In the end, there can be only one...