Totally agree with you about online ads, I worked in that space for years and that's not the goal with Ads. Years ago it became clear that Google was shifting towards taking over the lower level advertiser markets and providing services and automated systems to use Ads without requiring a marketing agency while providing higher levels of data analysis and tools for agencies to tap that market. Has nothing to do with stealing from advertisers, and a lot of Google's internal programs will likely drive more money to these smaller players.
> iOS and search both generate revenue by making the product they're actually selling more effective
In the abstract, sure.
The problem starts with separating financial incentives internally from product improvement and aligning it with short term revenue increases. Then you start separating the financial side from all other aspects of the business entirely, a la Jack Welch. That's where a lot of major US corporations are right now. When that happens, you end up with a conflict between what is best for the company and what is best for the people running the company, and you end up with product quality decreasing.
Right now from an outside perspective it looks like there was an internal conflict in the Search team at Google and the more product oriented leaders were pushed out in favor of the finance guys over the last year or two, with a side effect being lower search quality.