Then when inevitably some of these "not quite the best" hackers build a popular site, Google is forced to come crawling back and pay several million to acquire the company, instead of the several hundred thousand they would have payed them as salary.
So either everybody else can just go packing, or all those brilliant people will somehow get lost in the Googleplex and never be heard from again. Perhaps it is actually good for "the rest of us" that Google buys so many talented hackers. Perhaps they will never create anything useful again in their lives (a bit like the stellar scientists retiring at Princeton), and we have so much less competition left.
As I think PG mentioned in another thread, when companies buy a startup they are not only buying the code but the founders too. This means that in essence, they are still hiring the best people out there.
No matter how much you like the company you work for.
The intangibles of execution can't be repliated like market share, customers, brand loyalty, UI design.
I mean look at how much street cred Google Video has compared to Youtube - not enough to just slap a google logo on it and wait for the world to beat a path to its door.
There are too many of them to be hired by one company, regardless how big google is getting.