While Cuil failed, it only cost them about $30 million to do most of what Google does.
They raised ~$30 million in two rounds, but their valuation was at $200 million by round two. I agree with your point though; the cost to develop a good search engine is dirt cheap compared to the value it brings.
"Valuation" by whom? They had no revenue, no revenue model, no VC would give them additional funding, and Google didn't buy them out. On September 17, 2010 at 1 PM, all the employees were told the company was shutting down.
Google did hire the CEO and Anna Patterson to keep them from doing another search engine.
