Though it’s very easy to cast it that way, and certainly is a strong argument, think about it this way – If Google bought MySpace, it’d all of a sudden be waist deep in the content creation/publishing business, a business it’s been very wary of playing in. Now, I think Google is a media company, of course, but when they start owning sites that otherwise might be major AdSense partners, it’s the equivalent of pooping where they eat. Sure, you own MySpace, and it’s huge inventory, but you’ve just made the rest of your AdSense partners very, very nervous – all of a sudden you are not the neutral partner, you’re the big ol’ competitor in the content space. You’re the head, and the tail feels like it’s being wagged.
I think Google realized that buying MySpace could queer its AdSense business, and that’s why they didn’t do it. I was led to this line of thinking by a good pal in the industry with whom I was meeting yesterday, who for now must remain anonymous, but trust me, he’s deep in this game.