Who uses Google Shopping?
Google's shopping search results have always been hopeless. Too many rubbish eBay items, wrong items or unavailable items from old web pages. On a level playing field, they wouldn't be able to compete at all because they're so laughably bad at "doing" shopping. Hence the Foundem story - if true - is entirely believable.
Google jumped the shark a long time ago, notably when they tried to take on Farcebook in a market where mediocrity, poor usability and privacy concerns are all clearly trumped by critical mass. Not a very intelligent move. The basic search engine is still good, though, and Android is sufferable, so it's not all a disaster.