I hear a lot of people express this idea, but in my view things are a bit different. Mostly, it's a LOT easier to deliver a relevant ad than to develop spot-on organic search results -- especially when so many are looking for ways to manipulate Google to get their own site to the top. The only reason Adwords zoomed into the market was that so many people already loved Google search. Now it's a few years later, but it seems clear to me that if Google loses some of their market through dissatisfied users, then they will also lose a similar proportion of their ad revenue.
Organic still is still the first place most people look on a search result -- eye tracking "heat maps" show this over and over. So I doubt that Google would intentionally aim for mediocre organic results.
<edited for spelling>
[edited by: tedster at 4:45 am (utc) on Jan. 27, 2006]
