Google News has launched a very Topix-like search of local media and blogs via city name and ZIP code. The service includes semantic search.

“We’re not the first news site to aggregate local news; we’re doing it a bit differently,” notes Google’s blog. “We’re able to create a local section for any city, state or country in the world and include thousands of sources. We’re not simply looking at the byline or the source, but instead we analyze every word in every story to understand what location the news is about and where the source is located.”

Google goes on to note that article rankings will take into account a publication’s location so it can promote all the local sources for each story. In my limited testing of the service, not very much came up. There were just four entries under “92009” — two from The San Diego Union Tribune, one from The North County Times and one from CNN Money.

So what does Topix think about its new competition (and for that matter, blogger-centric sites like Outside.in and Placeblogger)? CEO Chris Tolles, in comments to us and on the company’s blog, doesn’t downplay the potential threat. But he notes that Topix, which has 26 employees, has actually developed a user-generated content niche that has become more important than local news. Sixty percent of its content is now written specifically for Topix, and that generates 75 percent of its usage, he says.

Tolles also says the Topix platform is integrating tightly with a number of newspapers (it is 80 percent owned by Gannett, Tribune and McClatchy). While it doesn’t have Tribune’s L.A. Times, which is building its own local news generator, it is working with the Chicago Tribune, Gannett’s Indianapolis Star, as well as various MediaNews Group properties, among others.

Tolles also notes that Google is a big partner of Topix via AdSense. “We have more of a ‘natural’ tie with them,” he says.