"Hi John - Thanks for the feedback. Maps uses Mercator because it preserves angles. The first launch of Maps actually did not use Mercator, and streets in high latitude places like Stockholm did not meet at right angles on the map the way they do in reality. While this distorts a 'zoomed-out view' of the map, it allows close-ups (street level) to appear more like reality. The majority of our users are looking down at the street level for businesses, directions, etc... so we're sticking with this projection for now."
1. Mercator is conformal, which means angles are preserved. So if you zoom into any small part of the map, it will look right. Equal-area maps distort angles.
2. North is always in the same direction—up. Together with the conformal property, it means that all directions are preserved: North, South, and everything else.
The primary use case for Google Maps is not to show the whole world at once, rather it is targeted at street-level mapping. Hence, Mercator is an ideal choice.
There are design and technical concerns, but they are not insurmountable. After all, if you ignore tilting then Google Earth is essentially a dynamically redrawn (position and scale variant!) planar map projection. With the proliferation of vector maps on mobile and WebGL in the browser, it seems like a solution could be found.
However, Albany (Australia) appears to be South of Melbourne when in its starting position on this map (inverted when moved to its correct position.) How is this possible?
If you want great circles to be straight lines, use the Gnomonic projection.
http://demonstrations.wolfram.com/GreatCirclesOnMercatorsCha...
Most people don't own an Atlas anymore. In the public consciousness Google Maps is the world map. If choice of map projection is important anywhere (which is debatable), it's important on Google Maps.
And remember: you can always fail over to Mercator.
Projections, Mercator included, are ways to map a 3D shape (the globe) onto a static 2D surface (a map). Google Earth uses a dynamic 2D surface (a screen) to display a changing view of a 3D object. See TL;DR.