'They are taking on yet another web2 service that has a broken business model and will loose them money left right and centre.'
I think you might have hit on something there. If Google buy enough loss making services they might be able to say they aren't a monopoly - because if they were they'd be rich like Microsoft.
In which case I'd like to talk to the Mountain View boffins about my virtual 'notes to the milkman' Web 2.0 synergetic holistic mashup enterprise. People pay nothing to write notes to a non-existent milkman in 140 characters or fewer, they can follow their favourite milkman and share favourite notes with other milk drinkers. It makes no money, is completely pointless, will be forgotten in six months time; so by Twitter reckoning, must be worth at least a billion. Two billion if we can make it an iPhone app and get Stephen Fry onboard.