They released a beta that works for a small list of cities. Years later there is still no released progress and in my opinion its killed a lot of competitors.
Its a great, though obvious idea. Local bus systems have the worst and least helpful web sites ever. A simpler global app would be invaluable. Except no one makes it because who would go out and start a mobile "When will my bus come to this stop" application with the probability of google transit launching at any moment? No one, and so a lot of innovation has been held back.
I get angry about that every time I sit at a bus stop. :)
My reason for not going into it has nothing to do with Google: it's that a.) I don't want to deal with dozens of municipal goverments and b.) if some bureaucrat decides he wants to expand his turf, I could find myself competing with the government. Now there's a monopoly - with the power to tax and the lack of accountability to shareholders, governments can waste far more money than Google.
It sounds like a good business for an older entrepreneur though, preferably someone with local government experience.
The same can be said for "Froogle". This is a search engine from the world's most popular search engine company, but their competitors are still very much alive (and provides a better product).
Youtube was far more popular Google's alternative video service, so they forced Google to buy them
If you have an idea you shouldn't worry about Google. The real threat comes when Google buys one of your better competitors, then you might begin to worry.
But M&A frenzy shouldn't gloss over the need for a way to monetize a product. If you're building a good user base, and have a way to make money, you're in good shape no matter what Google does...
A) Google will trend towards a short-sighted bureaucracy over time, as most public companies do.
B) As a result, the opportunities for the small nimble players to succeed will still be great.
C) Having Google, a big public company with a big bank account, is actually a great thing for startups; it is a company that understands the market that it is helping to create, and can used its deep pockets to acquire companies that create a lot of value.
D) Strong adversaries (Google) lead to better products! Which is great for users!
I would think that Gmail is the perfect example of this. I read about it all the time, but that's because I read slashdot, digg, reddit and other sites that most people don't read.
Even people studying computer science don't know about Gmail and has to be told that there is an alternative mail service. I bet that most of Facebook's users don't use Gmail or don't see the point when they have Hotmail.
Google can integrate theirs, you can't.
A lot of people will choose the competition simply because the competition to Google is the underdog, and people often sympathize with the underdog.