Here is an example where people are fighting with their own ads at Google.

http://img251.imageshack.us/img251/5472/adwordsfightus3.gif

As Philipp said, "It seems silly of the company to advertise on places where
it's already organically the #1! Google should have ways to avoid this
perhaps, too..."

The complete post at
http://www.idealwebtools.com/blog/fighting-with-yourself/

Thanks,
AjiNIMC

They may just want to keep their competitor out of the sponsored results (at all costs).

A bit poitles IMHO unless you are failing. I never click sponsored results

Makes sense to me, if Dragon weren't in the sponsored space another company would be. This way they keep their top spots. I never click on sponsored links but plenty of people do.

A lot of people think 'what's the difference?' and click whatever seems the most relevant link – sponsored or not.

They're not fighting with their own ads, most likely they're fighting with affiliates who are offering the products with a tagged URL. Theoretically, Google should only be displaying one of the two ads in this situation, but it's hard to recognize duplicates completely. And it's close to impossible for a consumer to notice that the ad is from an affiliate, for the company in question.

Also keep in mind that sometimes it makes a lot of sense for a company to use PPC (Adwords in this case) for keywords where it is #1 already. With PPC you can control exactly what you want to appear in the ad, you can react to current events, you can put up specials, you can also use it to grab the top spots instead of "just" a single top spot. How many times have you mentally ignored #1 because you assume it's too commercial (ie. you fell you might be paying too much for the product and they take the profit to get a #1 listing instead of improving the product itself)? It happens to me all the time, I usually try #2, #3 first and then go back and check #1 (unless #1 is very compelling from the start). Remember "we try harder" – sometimes #2 can be better. By getting the top PPC listing + the top organic listing, your organic listing appears to be #2 :-).