It was very telling during TGIF that week when Larry and Sergey skipped literal pages worth of top questions about it and refused to give direct answers as to why it was shut down.
The Reader shutdown coupled with Google+ reaching its tendrils into every product (“hey, real identities are great for YouTube users!”) at the time convinced me “don’t be evil” may have been a goal, but “don’t miss out on profit” was a requirement.
They don't need it to fingerprint people by forcing them to sign in -- Google has enough other priorities like Search, YouTube, Chrome, for that.
Making Gmail available for free to consumers, along with Docs and Drive, isn't something to drive ad sales. It's to get everybody used to the products and liking them, so that businesses choose them instead of MS. Google has successfully turned themselves into the main alternative to MS Office with this strategy.
When it comes to Gmail, Docs and Drive, Google's making their money "honestly" -- not through ads but through paid corporate subscriptions, and a smattering of consumer ones (like extra storage).
Not every engineer wants to live the fast-paced "create and move on" life, there are so many skilled engineers who would happily take the lower salary, but also lower-pressure, maintenance jobs.
If a project makes a million bucks under Google, that doesn't even remotely push the needle and it gets shut down. If a 5 man subsidiary makes a million bucks, that's a million bucks. Foster that?
EDIT: I see I misread your comment and you’re talking about keeping it on Google infra but separating it for accounting purposes. It’s an interesting idea but I don’t see why it would fundamentally change the viability of the product. Also, there’s an ongoing maintenance cost to having more products on shared infra. If you’re the team that runs the global distributed relational db (for example), or maintains the C++ discrete optimization library, it’s much simpler to support two products that make a billion each rather than 2,000 subtly different use-cases each making a million each. Not to mention costs incurred by non-engineering departments (marketing, accounting, legal).
I wasn't at Google during the reader shutdown, but after being here at 8 years, I now understand why things shut down so often.
Google has a lot of shared infra and they are always doing forced migrations and various unfunded mandates. Depending on the stack, maintaining a project at Google takes 0.5-3 people (like if a UI toolkit is turned down, you have to migrate). Plus there are infra costs.
On top of that, being on maintenance for a project like Reader, it's probably not very good for your career trajectory. The adverse effects of always going for launching/landing destroyed so much at Google.
Many engineers would love to just help maintain software like that, it just doesn't tend to work out given the incentive structures. (Plus that headcount and infra has to be attributed to some team. A person maintaining Reader means some other thing that can't be built, so there isn't an incentive for VPs either)