Google will go along with broad censorship if big enough guys start pushing them around. That's not not being evil but rather it's censorship, no matter how much you try to spin it differently. It's also a pretty obvious problem with the "Don't be evil" motto in the first place. As reported elsewhere that's just not very easy to do.
The pragmatism of "They would have blocked us completely if we didn't" is really quite difficult to deal with. Is "most of the news" news at all? I don't think Google's computation of a 2% loss of information means anything if those 2" are the worst 2% to be without.