Late last week Bloomberg Businessweek reported that Facebook is working on an improved search engine with 20 developers under the direction of former Google engineer Lars Rasmussen, who joined the social network giant in 2010. According to the article’s unnamed sources, the goal “is to help users better sift through the volume of content that members create on the site, such as status updates, and the articles, videos, and other information across the Web that people ‘like’ using Facebook’s omnipresent thumbs-up button.”

As the news starts to make its way around the Web, the focus is on how this can intensify the competition between Facebook and Google, even if Facebook doesn’t directly go after the big web search enchilada. (Most seem to agree that it isn’t, at least not yet.) Better searching inside its own four walls, with its ability to use its host of knowledge about friends’ social graph data – their Likes and more – to more accurately personalize results, might encourage users to stay where they are rather than head out to search engine land, at least for some things. And at the same time let Facebook hone its advertising to profit from improved search results, too.

It would be an interesting turn of events, to have the leading search engine face the dilemma that online publishers long have been trying to deal with – keeping visitors engaged and exploring on their own sites rather than departing for Google in search of related information. As The Semantic Web Blog reported this week in a story about premium publishers deploying more semantic technology to try to solve that issue, most premium publishers lose 30 to 50 percent of their traffic to search engines.

Most of them head to Google, which had a 66.2 percent share of the search market in February according to comScore. Bing saw some gains too, at 15.3 percent – and one question in the air is, whatever Facebook might have up its sleeve, how will that affect its relationship with Microsoft. Bing, after all, is behind Facebook’s internal search engine and Facebook sends data Bing’s way for its social search capabilities.

In any case, in the last month Facebook’s OpenGraph protocol has taken some more steps that could help it further fill out an improved search engine picture. As Facebook describes in its Developer Blog, people now can “do all of the things they can do in a status update – including add friends and location – directly from the apps they’re using. For example, an app used to share your favorite meals can now make it possible to add where you ate and who you were with. These features give developers the tools to build more robust apps that help people to fill out their timelines with more detailed moments…. Starting today, location and friends can be added as properties to any photo, link, or status written from an app.” It’s another leg for Facebook to gain knowledge it could apply to better personalize a user’s search, for example, for French food spots in Chicago, based upon photos of meals posted via a Facebook app by friends who tag them with the restaurant name.

Meanwhile, as discussed here, a Google apparently mindful of just how far the Open Graph protocol can take Facebook, reportedly is trying to raise its semantic search profile.