Previously google used to organically list products in their "froogle" search. now all product listings are ads. Therefore it's not surfacing content from the entire web which almost always has products for cheaper prices.
I recall that when froogle/google-shopping first launched they were just filling in content from search results because they didn't have very much direct engagement by vendors. maybe that's changed now so the search results were just scaled back because not necessary.
I dunno. I'm willing to accept non-nefarious explanations for this. That doesn't mean it isn't on the whole better for google and their paid advertisers. Whether or not that also means its worse for consumers is an open question.
http://googlecommerce.blogspot.com/2012/05/building-better-s...
>We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.