Mercedes non-executive Chairman Niki Lauda confessed that they are a little bit concerned by the pace Williams showed during last week's Austrian Grand Prix.
Williams pair Felipe Massa and Valtteri Bottas locked out the front row in qualifying and competed with Nico Rosberg and Lewis Hamilton for most of the race before ultimately finishing third and fourth.
Bottas, in particular, impressed and finished just eight seconds behind the Mercedes of Hamilton to claim the first podium of his career.
To Lauda, that indicates that Mercedes' advantage over the rest of the grid is being reduced.
"The alarm bells are ringing that the competition is coming closer," Lauda told crash.net.
"If the alarm bell rings in time then you can do something. If you sit back - which we don't try to do - you miss out. So what we are going to do is keep on developing the car."
Lauda added that as far as the Drivers' Championship goes, Hamilton would be at a significant disadvantage if he can't get a strong result at Silverstone next month.
"It is [big], no question, because the Montreal race was a disaster for [Hamilton]. But he will keep on fighting, don't worry. He will be more motivated now going to Silverstone after this result and the points difference. So I really look forward to a good Silverstone race between the two," Lauda added.
"I hope that nobody else comes in between [them]. This we have to avoid and keep pushing the team - Paddy [Lowe] and Toto [Wolff] - to go forward again."