I’m really curious as to how on Earth did Google fumble the ball on this stuff? It’s hilarious that their search offering has been so bad for so long that the new Big Idea in Search is “What if you searched something and the returned result wasn’t garbage?”
I don't see it as fumbling the ball. The technology is brand new and Google just yesterday announced they are currently testing bringing this to chat too. Just like Apple does not release folding phones and rear screens first, the major player does not need to be the first mover. OpenAI has grabbed all the publicity but this entire time Google research has been publishing their own work in the field and they have shown it off at the annual google developer conference.
Now the day after Google announced that they are beginning large scale testing of this feature in search for an imminent wide release, Microsoft has released their version. There is no need for Google to be the absolute first. What is most important is that they keep the Google brand looking great and they release the feature when it is ready.