Google’s “20% time,” which brought you Gmail and AdSense, is now as good as dead

This means that a lowly engineer with a great idea will leave Google to develop it instead of developing it at Google. Perhaps, this is a good outcome given the way Google keeps killing web services that people find useful but aren't profitable for Google.

I'd be more worried about hiring the next great engineer and continuing to grow. I imagine this was a huge draw for potential new recruits who might now look elsewhere. Existing employees usually have a lot of other reasons for inertia and therefore not leaving (comp and all the other perks)

But then what's stopping Google from just turning around and buying their startup if it looks promising?

That was my first thought but then I realized that no-one can force them to sell to Google

They can't force in the gun-to-the-head sense, but they can "force" a startup to sell with the threat of throwing a billion dollars at the problem themselves.

Because one can buy success? Like Google+? Or a lot of things Microsoft has tried recently? I realize, all else being equal, a threat of a major investment by a deep pocketed company shouldn't be taken lightly, but the idea that Google can "throw a billion dollars" at a market segment and thus dominate seems like wishful thinking by management.