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"If you're not paying, you're the product" still applies, I agree.

That's a naive quote. You are the product, yes, but you're also the customer. Google has to appease you to keep you. Without a balance between consumer and advertiser, Google won't make any money.

This is only a valid point if people are aware of what is going on and make an informed choice.

I'd don't think this is true. Consider Internet Explorer. People used it because it was there. Even with better alternatives people used it. It took a fair while to educate users.

People use Google because it's the default search engine. They could get away with having only momentum. Appeasing users would then be unnecessary until a real competitor comes along.

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