Turns out when Michael Arrington penned A Few Thoughts On Google Knol he pointed out the real reason for Knol:
"…. More Ad Inventory Needed, ASAP
Wikipedia, a non-profit, has stubbornly resisted any efforts to monetize its pages. Google would kill to supply ads to Wikipedia. Barring that, competing with them makes a lot of sense.
Google needs to grow revenue to support their valuation. And for that, they need ad inventory. It wasn’t surprising when Google started hosting news directly and allowing comments (that = page views). So the idea of them hosting a knowledge base shouldn’t be surprising, either.
Authors have a choice - they can have ads or not. But if they have ads, they can only choose Google. Many authors are going to include ads, and Google will get extra inventory."
It's really about monetizing the inventory that Wikipedia represents - but Wikipedia is not running Google Ads (and I guess Google may have tried to talk Jimmy Whales into running ads on Wikipedia, but must have failed) Google retaliated by creating it's own knowledge base.
