I suspect one big problem for Google is the ignorant politicians and lawmakers/enforcers who think that the dissemination of information which _could_ be used for illegal activities is akin to the promotion of such activities.

And since you cannot without great effort educate people who are incapable or intentionally unwilling to learn, the easiest solution is to sacrifice some of your users to placate the idiots.

Maybe this is not Google's excuse, but it certainly applies to many other internet companies (craigslist for example).

Edit: typing on phone is miserable :(