Sure, but there are few advertisers out there who wield the power that Google does.
And for the record, we aren't just talking about Google not displaying their own ads, we are talking about them denying access to the programs that allow sites to run ads from any advertiser that uses Google for their web-based advertising (which is pretty much all of them). So in essence, Google has the power to say "you put up content we don't like and we will kill your site's revenue stream."
I'm not making a value judgement on whether or not that's a good thing, I'm just pointing out the fact that the statement that Google is unable to control what content sites put out is false. Sure, sites can do whatever they want in theory, but with Google being as powerful as they are, any site that doesn't play by their rules has almost no chance of being successful because Google won't let them run ads and will bury their site in the search results.