Is Google Competing with Me?

I recently started seeing new ads in my AdSense spots – run by Google:

So, if I refer someone into their AdSense program via a click, I believe all I get is less than $1.00, depending on who else is bidding for relevant links at the time.
But if someone clicked on one of my referral links (admittedly rather buried in the site at the moment…), I could earn up to $2000.

I emailed Darren about it, who recommended I filter them out with the competitive ad filter. And he also alerted me to the fact that this has been going on for months. I think they may have redesigned their ads recently or something, because I haven’t noticed them before this week.

What gives? Do you think it’s OK for them to place their ads onto a site that might have competing links to the same product?

We all know that if the tables were turned, Google wouldn’t allow it.

Oh, wait, they already don’t.