That's not the case at all. Google and Deepmind publish more AI papers than anyone else in the field currently. They literally invented the transformer model that GPT 3 is based off of. Also, they've had paLM for almost a year now and that's already better than GPT 3. I'm pretty sure Imagen is better than Dalle 2 as well although that's more open to interpretation.

They just haven't released these to the public because it isn't worth the reputational risk for them until they can be sure these language models aren't making false and potentially harmful statements anymore.

OpenAI hasn't done anything on the level of AlphaGo or AlphaZero yet like Deepmind has. AlphaTensor just came out recently as well so they're clearly still making progress.

Also to add one more thing, Sundar Pichai isn't calling a code red because they think they're behind technologically speaking. They're calling a code red because having a LLM remove the need for search is a huge threat to their ad business. Even if everyone is using Google's assistant instead of GPT 4 or whatever it's still detrimental to their bottom line as a bot can't serve ads the same way their search can.