There has been much written about Google now showing 4 ads at the top of search. Mostly about its impact on bidding and ad costs.
Given that Google tests these things and likely has a good handle on the income implications, we can rest assured that they have not made any changes that would reduce their income. I can’t speak to whether this change will make it harder for small businesses to compete although that has been an on-going trend.
In all that has been written about the change I have yet to see notice of its non-ad impact on Local search. IE the amount that it further pushes local results down the page and below the fold.
Here are two screen shots of the same search done on my Mac 13″ display, which has an effective web resolution of 1280×800. The impact is present even when Google shows only 3 ads because the ads all now can have extensions with sitelinks, reviews etc which also take up more space.
The affect of this is particularly noticeable when Google includes product search to the right.
Here is a screen shot from my home computer with a 1440 x 900 pixel display and only 3 ads. Note that the 3 ads and the many Adword extensions push the pack out of sight even on a larger display:
4 Ads At Top And Local Search by Mike Blumenthal