The battle between Internet giants Google and Facebook has been heating up in recent weeks.  The social networking titan Facebook recently announced plans to upgrade their users’ email to a full-fledged Web-based email system, a change that could impact significantly on the Google’s popular Gmail system. With the rise in popularity of social networking – Facebook has acquired 500 million members since it was launched in 2004 – the question in the industry now is whether Google, for its part, will try to create a social network to directly compete with their Facebook rival.

“We’re not working on a social network platform that’s just going to be another social network platform,” Google’s head of mobile product development, Hugo Barra, insisted at last week’s Monaco Media Forum. Despite the protests to the contrary, however, the questions abound.

Meanwhile, the rivalry has gone beyond the corporation’s programs and into their offices, as Google now faces a threat from Facebook for its employees’ talents. Recently, several high-level Google “techies” have moved over to Facebook, attracted by the opportunity to work at a smaller company and to receive stock options.  Google engineer Lars Rasmussen, one of the creators of Google Maps, was the latest switch-over, joining current Facebook COO Sheryl Sandberg, Facebook head of mobile Erick Tseng and Facebook vice president of advertising and global operations David Fischer.

In an attempt to stem the tide of top people “jumping ship” to their fiercest competitor, Google apparently plans to initiate a 10% salary increase for all employees, as well as to give a $1,000 holiday bonus to each one.