Earlier quoted context omitted.
Yes. This used to happen a lot on ad networks, although I personally don't know how pervasive it is now. The game is as jiggy said. Force competing ad buyers to pay for what appears to be non-productive traffic by forcing ad clicks. Since the real views are dominated by false views, the conversion rate on whatever is being sold appears to be horrible. The competitor goes elsewhere, and the scammer maintains access to…
How does Google prevent this? Is it simply inherently not-problematic, due to their spread of advertising?
It's a well known problem. Considering AdWords is Google's primary source of revenue, they work hard at it. For a tiny bit more directly from Google, see: http://support.google.com/adwords/bin/answer.py?hl=en&an...