Presumably one of the most important initiatives at Google outside of search has got to be Google Docs. Having a platform for people to create and edit documents on the web has to have been seen as a critical feature.
Why? It's not at all clear to me why Docs should be "one of the most important initiatives at Google." Since advertising brings in the lion's share of Google's revenues, their priorities are probably:
1. Search - where most of the advertising money currently comes from
2. Android - where most of the advertising money will eventually come from
Also, considering that google's enemy-du-jour is now Apple, not MS, I wouldn't be surprised if Docs has slipped even further down the priority list.