Comment by whalee
People could trivially switch their search engine to Bing or Yahoo, but they don't.
If ads are so overpriced, how big is your short position on google? Also ads are extremely inefficient in terms of conversion. Ads rendered by an intelligent, personalized system will be OOM more efficient, negating most of the "overvalue".
I'm not saying they should serve ads. It's a terrible strategy for other reasons.
Funny that you mention Yahoo, as in my mind they're the perfect example of what the poster above you noted: people quickly switched to Google once a better alternative to Yahoo appeared.