I mean, if it's a production line that is one thing, but if you are looking for creative new products then don't expect much from them in the future.
The web is way more mature right now than 20 or even 10 years ago. There's way lass untouched niches waiting to be filled by the new killer product. And Google already owns the search market, the ads market, the smartphone market, the email market, the browser market, the maps market, and soon maybe AI market, etc. What new untapped multi billion market is left for them to conquer? The pond is already fished out at this point. So of course most Googlers are gonna have to be factory workers keeping the factory running instead of dicking around creating new useless things that bring in maybe no significant revenue. The days of Google & Co. spending billions on pipe dreams is over for now.
Innovation is at start-ups which Google then buys because it has ad revenue. People go to work at Google because it pays well and less headaches than working at startups, not because they're gonna invent something new.
Google is proof that yes, it does create innovation. How many products and tools came out of people dicking around?
What new product has Google launched recently that it didn't cancel? Google's main money makers are all still products from 15-20 years ago.
Given all this it's proof that no, paying people to dick around doesn't generate more creativity once you peaked.
At the same time at their scale the measures of success are different. If a solution doesn't reach a huge audience it's quickly lost between the big products, while it might be profitable.
Back in the days an Orkut which served primarily Brazilian audience was okay, but compared to scale of Gmail, YouTube and Search (and the aimed reach of Google+) it was a distraction, not helping the core brand.
I don’t run a company, so I can’t tell you if dicking around would be worth it. I do know at the place I currently work they are making a new product based on some dicking around by another employee.
TL;DR - some of his Nobel-winning work began as dicking around.