1. Let's make a better search engine. 2. Let's put ads on our search engine. 3. Let's create our own ad network so that we can control what ads look like, so they're unobtrusive. 4. People like our ads, let's put them on other people's pages. 5. People want more interesting ads, let's expand out. 6. Our business relies on ads, we need to collect more user data so we can focus ads even better than our competitors.

By doing advertising 'better' they could make a better product. Unfortunately, they went down the exact same path that other advertisers did: getting more invasive and more aggressive and less user-centric. I hate slippery slope arguments, but this seems to apply in retrospect.