I'll answer the question to the best of my ability, based on my experience with Google Adsense and Google Ads, but I think you'll need a whistle blower if you want accurate documentation on this.
- We can't say exactly how the economy works, but because it takes more time and effort to produce something of higher quality (and therefore it has a greater value), we naturally perceive something that costs more to be of a higher quality. Of course, it doesn't stop people from using this fact against consumers, so we still perceive paid content to be worth more until we realise that it is not always true. Google Search results is a reflection of how people search for content (plus the lens it puts over those results through its own algorithms, which may not be without its biases as well)
- It has created a particular user experience that is now driving more users to alternate search engines, or browsers that come with other search engines by default. So it is probably safe to say that while most users still feel that Google Search provides the best results (they do continually test this with real people to refine the algorithm), there will always be others that prefer algorithms that focus on other types of search behaviours or preferences.
From a business perspective it makes sense for a company to favor paid content over free content (even if it is done unintentionally) because it is perceived to be good business (even if it is in the short term) to be generating revenue. After all, Google offers advertising services over its Search Services, and by having companies compete for visibility it can drive up sales in its advertising business.
Obviously no business is going to openly admit to such practices when its search results should be based on merits, but it is never a level playing field to start with anyway. These days we associate quality and trust with things that are 'socially proven', which is to say that having traffic and likes has become a de facto standard for what the average person see as being acceptable.
However, you will be able to find some research indicating that some portion of the people do ignore paid search results and only go with the organic search results because of the perception that paying to be visible means that the quality of the search result isn't as good compared to the organic results.
What this means is that based on the current state of the Google Search algorithms, different businesses will come up with their own marketing and advertising strategy to increase their visibility on search results. Whether that's buy paying for it, making their site more searchable and score higher on the algorithms or using a combination of different strategies, I don't think Google can say whether paid or free content is going to be better quality unless it's measured against their algorithm. And even then they will certainly not provide those metrics to you (even though you are paying for the data that they collect).
