Google is fierce competition for Microsoft, but the software giant does not fear the race and plans to upgrade his search technology in the next six months, Microsoft CEO Bill Gates said in remarks published today. On his first-ever trip to Israel, Gates answered questions about Microsoft's fierce competition with Mountain View, California-based Google.

"We are not afraid of Google, but there is intense competition between us. Google is our main competitor, brilliant people work there, but Internet search engines are still in a terrible state compared to where they could be," Gates was quoted as saying.

Microsoft and Yahoo already have been investing heavily in search, hoping to narrow Google's lead in the field. Google processed 45 percent of U.S search requests in September, outdistancing 23 percent for Yahoo and 12 percent for Microsoft's MSN, according to Nielsen/NetRatings. In addition, the latest Microsoft and Yahoo Alliance on digital book libraries are expected to challenge Google in digitizing many of the world's great books.

Gates denied the Redmond, Washington-based Microsoft intends to acquire Google or other leading Internet companies.

Microsoft has recently formed partnerships with Yahoo and RealNetworks , and is reportedly interested in buying a stake in Time Warner's AOL service. Google also has teamed up with with Comcast , the largest U.S. cable company, to explore buying a minority stake in AOL.