It's "open" in the sense of it was built on open protocols, rather than proprietary ones. Replacing those open protocols with proprietary ones makes you less open.

Google moving from Reader (RSS/Atom) to Current (unspecified protocols) is less open.

Google moving Calendar from CalDAV to their proprietary Calendar API is less open.

Google potentially moving Talk from XMPP to an unspecified proprietary protocol is less open.

Etc.

I think he means Google could've have open sourced Reader if they wanted to.

I presume the underpinnings of Reader (search, caching, etc.) are so tied to Google tech that open sourcing it would either be impossible or lead to a neutered version that was useless.