UPDATED: Looks like Google is partnering with MySpace's iLike and with Lala for their iTunes music competitor. TechCrunch again has the details:

From information we’ve gathered from sources, the new service will be integrated into Google search. Users will be able to stream songs directly from Google via partners iLike and LaLa. Additional information around the music query will be provided to users as well (presumably any relevant results from YouTube as well as information already available in Google’s existing music search – example). One source said that Google will organize music searches in a way very similar to the way they do public company stock searches today. Users will also be offered the opportunity to purchase songs for download, we’ve confirmed.

Original post after the break!

TechCrunch is claiming, based on multiple sources, that Google is set to take their Apple competition to a whole new level by introducing their own music service:

the company has spent the last several weeks securing content for the launch of the service from the major music labels. One source has referred to the new service as Google Audio.

Unclear is whether it will be streaming or download/purchase (could it, would the record labels let it, be like Spotify?!), and whether or not it will be available outside the US. (Amazon MP3, another iTunes competitor, has struggled to deploy internationally).

This would help record labels take another shot at iTunes dominance in the market and give Google's Android platform another checkbox towards iPhone parity.

What kind of service would you want from Google Audio?