In a word, yes. It's not quite as dramatic as All Facebook makes it out to be. They call Facebook's Social Graph-based search "a full scale attack on Google on all fronts at this point." I'm inclined to believe that it's more of a wakeup call for Google in terms of really needing to tackle social and semantic search, not a harbinger of doom for the search giant.
CNET's Tom Krazit takes a more reasoned approach to the growing competition between Google and Facebook:
If you're spending money to place ads next to search results, you want assurances your ad will appear next to the most relevant results, and Facebook search has a long way to go on the relevance factor.
Display ads are a different story, as Facebook continues to turn itself into a sticky destination site. There's no question that Google is watching Facebook closely as it turns into a Web powerhouse...
Google is already surfacing search results from your social networks in its standard searches, but Facebook, despite the inaccuracy and unpredictability of the web search results appearing in its "Social Graph" search, has hit on an important tool. The search results from Facebook are based on web properties that Facebook users "like."
As social networks become ubiquitous among much broader demographics, leveraging the web viewing patterns of users rather than links from other sites (essentially the core of Google's PageRank algorithm) will become increasingly accurate, relevant, useful, and, more importantly, monetizable. If Facebook (or any other social network, or Google, or whomever) could find the right algorithms to match ads with user interests (accessible from social media profiles and users' web traffic) and search, then there's some serious money to be made.
This is really the heart of semantic search. Google has managed to leverage search histories and location fairly well, but nobody has discovered the secret sauce for true semantic search, some of the most important drivers for which will be in users' social networks. Frankly, Google remains in the best position to do this given their analytics capabilities and extensive investments in PageRank and search history data collection. Facebook isn't going to displace them in the search market, but will hopefully drive them to further innovations in semantic and social search.
As usual, this means that we'll need to cede additional privacy to Google (or whatever group manages to find that secret formula for semantic search) since they'll need to know our deepest darkest thoughts to make the web more "personal." However, as the web continues to grow, it will become vital for search results to be refined based on our interests, preferences, and needs.