It is not "code red" because Google doesn't have comparable deep net expertise to openAI. It is "code red" because whenever a market is disrupted, it offers opportunity to unseat the leader.
Up to now, Google was so far ahead, that even after investing tons of resources, Microsoft wasn't able to catch up. If search is turned upside down by combining deep neural nets with a large index, then suddenly the Microsoft+OpenAI partnership is a real threat. Yes, Google could do that too, but they don't have necessarily an unsurmountable advantage.
Up to now, Google was so far ahead, that even after investing tons of resources, Microsoft wasn't able to catch up. If search is turned upside down by combining deep neural nets with a large index, then suddenly the Microsoft+OpenAI partnership is a real threat. Yes, Google could do that too, but they don't have necessarily an unsurmountable advantage.