Honestly, why is it such a bad thing when a company with absurdly high profit margins delegates some of the income back into improving the general standard of living for everyone.

Call it what you like. Write it off as them improving their image with the public, or as getting more users into the ecosystem, or becoming more vertically integrated.

But fundamentally, why is doing something that is good for people looked at as such a bad thing. From what I understand the public don't even have the majority stake in the company, and don't really have to get a say in how it is run. If they don't like that they can buy other companies stock.

If ones goal is to maximize happiness (or some other equivalent metric), there will be times at which the decision to maximize profit will diverge from this goal, and the ethical decision will be to spend money (which you have from profits in other sectors) to develop something at a net loss because you think its right.

(I'm not affiliated with google, this is just a broader point that irritates me).

Perhaps they are maximizing earnings with an outlook of fifty to one hundred years. Allow their engineers a free hand so that product offerings are as diverse as possible and can later be integrated for advanced usages. Build interesting things and simply give away those not immediately profitable to gain and maintain constant mindshare in consumers. Rather than product ideas starting at the top and trickling down through layers of bureaucracy, anecdotes seem to tell of a flattened structure wherein thousands of independent projects churn in a chaotic maelstrom of ideas, with internal popularity and management approval selecting how projects will be made public, monetized upon or released through marketing machinery.

As to your example, free optical opens consumers to try new technology since their costs are minimal. This creates general consumer knowledge that the technology exists, which creates demand, which can be fulfilled by monetizing the persons already geared for running and maintaining it. And if the experiment fails, it was decent marketing and proved the market doesn't exist without having to gear up and release product specific sales, marketing and other auxiliary offices needed for a paid product launch.

One presumes that shareholders of google buy in with the knowledge and approval that the company works differently than many others. Whether this direction will be advantageous or disadvantageous is what the stockholders are wagering upon.

My understanding is that the free optical network they'll be giving out is intended to showcase the effect of high-quality internet service on a community.

Google seems to be committed to the idea that what's good for the internet is good for Google.

Why companies even care about what their shareholders think?

It's not like they gonna show up with their shares and ask for their money back.

Only things that I can think of is that members of the board might care because they can be sacked by shareholders, also company might want to pat shareholders on their heads because it is planning to sell more of its stock to gather some more free cash and wants it to be as much as possible.

I don't think you can sack google founders and I don't think google cares about money from selling shares anymore, so why anyone at google should care about what shareholders think?

If you buy GOOG stock because you expect them to maximize short term profit, you haven't really been paying attention. It's not like they haven't been telling people what they're up to:

http://investor.google.com/corporate/ceo-message.html

http://investor.google.com/corporate/2004/ipo-founders-lette...

The Nexus One was intended to drive the improvement of Android, which is intended to increase ad revenue.

They're not a product company. They're an advertising company. This may change, but that does not mean all their efforts should be put towards changing it. They're expanding and creating their existing market, while putting feelers into others.