People probably know Google's informal company motto "Don't be evil". Google is a very successful company that knows a lot about its advertisers and users. In addition, Google has a market share that would allow them do certain things.
What could Google do if they were evil? Note that the following is only hypothetical:
Google could favor its own products and websites
Google could prefer websites from its own services in the search results: websites that run Google ads, websites that use Google's payment service, Blogger sites, Google Base, etc.
All websites that pay Google in some way could be preferred in the search results while others are downranked.
Google could punish websites at discretion
If Google doesn't like your website or if someone tells Google that you're a bad boy then Google can ban your website from the search results without any reason given.
You can find a lot of articles on the web that discuss the problem that Google removed web sites from the index. The main problem with these removals is that Google usually doesn't explain why a web site has been removed so that webmasters often are complete and utterly at Google's mercy.
Google could use your data against you
Most Google products now use a single account. That means that Google knows a lot about you if you use their services: your address, your credit card number, the web pages that you visit, the web sites that you own, how much you earn with your web site (if you use Google's analytics product), etc.
Google could sell this information to other companies, the government or any other person that pays for it. If one of your web sites causes a problem with Google, they could ban all of your sites. There's a lot that Google could do with the information they have about you.
Google could force webmasters to advertise
Google could decide that web sites that advertise on Google get better rankings in the search results. They could also decide that companies with big wallets don't get high rankings so that they have to advertise more.
Companies that use Google's analytics software to track their sales tell Google how much they earn. That allows Google to raise the advertising costs based on the revenue of the company.
Google could do most of the things above and it would be very difficult to prove that they actually do it because Google doesn't reveal the ranking algorithm. Maybe you know the saying "Power tends to corrupt and absolute power corrupts absolutely." Let's hope that Google can resist the temptations of their power.
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