Maybe I've misinterpreted the article, but it seems to me that they're referring to cutting back the number of publishers, not the number of ads.
Jonathan Rosenberg, Google’s senior vice president for product management, said that Google had chosen to reduce its advertising coverage — the percentage of Web pages on which it displays advertising — to an all-time low.
That offers some explanation for the publishers who have been terminated for seemingly no reason. But nowhere in this article can I find anything which indicates that Google is turning away advertisers. They're simply displaying their ads on fewer websites.