Good points. But... why did Google kill Google Labs? Why not have a separate entity for basic research, like Bell Labs? There is no shortage of funding.
I do see a major difference between selling ads to advertisers (and organising the world's personal information for profit) and selling phone service(s) to customers, but maybe that's just my perspective - I've been using the telephone and the web much longer than most people working at Google - I've seen how things could be done differently.