In Case A, google wins the bid, they gain the ad space, but gain no revenue.
In Case B, google does not win the bid, they lose the ad space, but do gain revenue.
Revenue and ad space are mutually exclusive, each is the opportunity cost of the other. Yes, in both cases google wins, but that is because google is the reason the ad space exists in the first place.
I’m not following the logic of how Google’s camera comparison shopping business is unfairly more profitable just because it’s bolted onto an immensely profitable ad company.
Imagine you're a car salesyard in a small town. You don't want your competitors to be able to advertise, so you buy the company that publishes the only newspaper in town. You don't want to be accused of being out-and-out anticompetitive, so you still let your rivals advertise, but you charge them $500 per car advertised. Is this OK?
[1] Although this particular mechanism seems pretty dubious and may even qualify as "shill bidding", which is forbidden at other auction venues such as eBay: http://pages.ebay.com/help/policies/seller-Shill-bidding.htm...