Why they do it? Because it works (until it hits HN front page).

From my experience, running client sites, Google is blindly trusting anything from big brands, screwing the small business sites. It's almost like content quality doesn't matter at all, especially after all the animal updates (Panda, Penguin etc.) Small sites are desperate as they have lost as much as 90% of traffic for no apparent reason.

It must be profitable for Google too, their earnings have skyrocketed since then, even as they hit a plateau in market share. Occam's razor and all.

Edit: The competing theories as to why Google does it are that Google wants to shake small business into advertising, considering that brands already do. Once you lose traffic you can advertise or close doors. Another one is that so-so search results are better to increase ad clicks. Considering that Google has a monopoly and still a strong brand, the second theory cannot be ruled out.