why would Google care about letting your website continue to rank at #1 when...

...it has a paid service (AdWords) that it wants you to use instead?

Because Google's users care about getting relevant results as well as
the paid results.

Because when they piss off all the users and they go elsewhere, having adwords will be irrelevant because there will be nobody to click it anyway.

Without relevant organic searches Google has no customers to click on its crappy ads by mistake. So it uses the organic as the bait for the ads.

.
Perhaps ‘search' doesn't care/know what ‘adwords' are doing, and/or vice versa

Google has to tiptoe a fine line between pushing Adwords too hard and organic search results.

Over the past couple of years it's pretty obvious this is something they are still trying to figure out how to do.

If they push ads too hard, people leave Google. Too little, and they don't make money.

It's almost a self correcting thing really.

Hey OP, can you imagine the search results with only paid links on them?

glynnii said:

...it has a paid service (AdWords) that it wants you to use instead?

Click to expand...

If you go to Google.com, there are two kind of sites on the SERP.

1. The organic
2. The paid (adword)

The organic result contains mainly sites that attained their ranking through trust and authority.
Only a few fraction gets to the top via SEO/backlinks.

While the adword with the sponsored ads are paid.
If you have a site and want to rank it for certain keywords on Google then use adword, it takes only minutes.

Now, the reason why Google allows sites to rank on their search engine for FREE (Organic result) is because they put their visitors first over their customers. If there is no visitor there is no customer.
It's just a simple logic. With high value customers they now have high valued clients (adword users).

That was one of the reasons Google started banning adsense sites for poor or fake traffic, clicking ads e.t.c so that adword users too can get value for their money not that they dislike Google adsense publishers.

tony_d said:

Because when they piss off all the users and they go elsewhere, having adwords will be irrelevant because there will be nobody to click it anyway.

Click to expand...

There's an answer that actually makes sense.