Please don't have the impression that I am being condescending toward universities, I respect and admire a lot of work that is being done there, I just think that not all of innovation can happen there. Google uses a lot of theory, but they also act in the real world and face real-world problems that can inspire new research and new theories, whereas at an university you are to a large extent cut off from such stimulus.
In fact, I believe what Google is doing so well (and what is attracting great academic researchers like Hinton) is the creation of the rich and rewarding atmosphere mimicking that of classic academia. (And at the same time, cuts to education and research budgets are helping to erode the benefits of a life in the academy.)