Google shouldn't be in content business. I'm dismayed that they're following the 'peanut butter' strategy that has been such a destructive influence on Yahoo. If Google gets even more into content side of the business, they'll be in the conflict of interest with all of the ad buyers that are actually driving their business. By trying to generate 'a little bit of revenue' (from the google's perspective) through this, they will lose a lot more from companies that will seek alternatives.
Thanks to my economics education by reading JoelOnSoftware, I am guessing that Google is trying to make content a commodity. Their main business is to be able to search through vast amounts of content, hence the more content there is, the better for Google. So blogger, App Engine and Knol make perfect sense.
This moves reminds me more of Microsoft in the 80s. and then your question becomes, what is it about Microsoft that seems so successful that Google wants to emulate their business model?
Their stock price dictates that they have to continue to grow very fast, and they probably see the end of growth looming ahead (once they hit 100% share).
