On Feb 1, 2011, Danny Sullivan published a post on Search Engine Land describing google's allegations that Bing is copying google results to improve their own search results.
Google set up some honeypot pages for nonsense words, and the only way Bing could get those was if they were sniffing them out through Internet Explorer usage out of Google.
Based on the discussions I've seen on this, it seems that Bing is using the Internet Explorer browser and permission from users to watch their browsing behavior, they're watching what people search for on Google and other search engines, as well as what they're clicking on, to collect information for improving their own search results.
Google suspects this is much more widespread than just the obscure searches that they've used to definitively identify this behavior. It's just really obvious to see that Bing is picking up search terms and search results, likely from Google employees running these searches on IE browsers.
This list contains some of the interesting posts and tweets surrounding this scuffle.
This has been dubbed #copygate on Twitter. Check that hashtag for a finger on the pulse.