In the live webcast they said that they use auto-complete to populate the instant results. Typing "online deg" auto-completes to "online degrees", so that's the query used to generate the instant results.
"online deg" probably isn't the best example, but there are still going to be cases where a prefix autocompletes to a different target than the final intended search, that SEOs for the final intended search will want to start ranking more highly for. Finding those cases will be part of the fun.
Ask it another way: do you think a service that shows what the current google autocompletions are for every prefix of a given term becomes more or less interesting to SEOs after this announcement?
I think what ruby above is saying is that with enough websites, urls and content, an SEO attack could turn 'online deg' into a valid keyword.
Google auto-completes brands and keywords that only have 2 or 3 website references (I know of a site in stealth and I just tried it, and it worked. Google has indexed their homepage and title, and as I typed it in it auto-completed their name, with only a single website to reference).
"an SEO attack could turn 'online deg' into a valid keyword."
If you have that much power, you probably have a better way to spend it. Also I would bet that suggest keywords come from user searches themeselves, not the web. That's why I suspect the impact of this is probably relatively minimal.
Call me crazy, but I think Google just might have considered the SEO impact before deploying this. If it's not literally on a checklist somewhere for deployment of search features, I'd be stunned.
Ask it another way: do you think a service that shows what the current google autocompletions are for every prefix of a given term becomes more or less interesting to SEOs after this announcement?