OK, so the previous rumour was not entirely true, but also not entirely incorrect. Google is integrating iTunes, CD purchase and lyric links to searches that look like music titles. C|net has a quickie article that explains a bit better than the official Google Blog.
It looks like one of the original quotes from way back in August was spot on:
There’s “speculation of an iTunes launch,” says Paul Foster, an options strategist at Theflyonthewall.com. “Google is going to offer iTunes somehow on their platform,” according to the rumor, he says.
If Google has been thinking about this since August, then I’m guessing that negotiations with Apple was probably the main delaying factor. It’s not like this is total rocket science compared to some other things Google does (stock quotes, translations, etc.). However launching the service without iTunes integration would have been a lame-duck. Yet again Apple holds the reins on this whole online-music meme.