If someone is typing "used iPhone", I think the correct response would be to show them adverts for used iPhones. This is really poorly written.
On the other hand, those ads might be burying a search result that offers a better, cheaper, or more reputable place to buy that used iPhone. This is a win for the advertiser since the game is influencing behavior, but that consumer might kick themselves for missing a better alternative because the ads were in the way. This reality subverts the ideal mission of an Internet search engine: to return the most relevant and interesting result first. It's not as if Google hasn't been working hard since its inception to improve this, too.
Disclosure: I work for a company that makes (almost) all of its money from ad sales.
Could Apple compete with Google in search? Yes. Are they today? Not really.