It's worth noting that Google's prospectus [1] as filed with the SEC says that Google will always pursue long-term opportunities even if they hurt Google in the short term. Patents are an example here; Google could sue all of its "competitors" out of existence today, but would that really benefit Google in the long term? Would you work at Google if they were the company that put every tech startup out of business with "method for computing the sum of two integer" patents? Probably not. So aggressive patent lawsuits are not what Google's shareholders want. And doing what the shareholders want is not exactly "business cluelessness" :)
[1] http://www.buec.udel.edu/pollacks/Acct351/handouts/SEC%20For...