MS clearly uses toolbar users' clickstreams (on and off Google) to improve their own search efforts. Google created an artificial scenario where the ONLY input was Google search behavior and lo, the search results are exactly the same. Whether or not that steps over a line (I don't feel that it does), it's not "copying" in my book.
Another interesting point is that Google has been beating the "open" drum for a long time now. No walled gardens, right? If a Facebook user should have the right to take his data with him wherever he wants to go, shouldn't a Google user be able to fork over their behavior data to Bing?
Matt's point about MS' lack of clarity when getting folks permission to grab their clickstream was dead-on. THAT is pretty outrageous and MS should be ashamed of that.
Regardless of all that, hats off to Matt for keeping a cool head and stating his position in a respectful way.