Consider it from a management/budgetary point of view. Super smart people? Oh hell yeah, and I don't fault them for this one bit. But bean counters? Why the hell invest in hiring those people, or budgeting for search quality improvements, when you have essentially no competition to speak of? Makes more sense to put those same smart people on projects that correlate people's activities outside of Google with activities they can observe either directly or indirectly to create a more wholistic picture of the consumer for advertisers. Those are much harder problems to solve, especially now that the public is finally becoming slowly more aware of the massive abuses of privacy the bean counters like I described above have been pushing for years.

At the end of the day Google doesn't exist for the good of the public, they exist to return the highest possible investment for shareholders. It's literally the opposite of their job to improve search quality when competition doesn't force them to (because investors see that as a waste of money that could have been spent on further eroding people's privacy to enable higher and higher ad revenues.)