Apple has a similar story with Android phones. Keep innovating or get your low-end eaten.
Google doesn't have to innovate. They're already China. If somebody makes something they like, they'll buy it. Or make a knock-off.
Yahoo has survived, and made a lot of money for a lot of stakeholders over the years. I would also say that they have a better record than Google when it comes to privacy, legal entanglements, and general good open-source citizenship. Yahoo is a success story. Anyone who presents it otherwise is just putting their own lack of perspective and/or business sense on display.
What is more, it's clear the founders are still very keen to push the limits of innovation.
Maybe, as has been said by others, they are not shutting this down but restricting it. In effect, they're replacing most of the 20% time with acquisitions but they do still have the process alive to enable some internal innovation.
Additionally, Corning sold off the Corningware brand to a non-research focused company. They've pivoted again, and their research (and relationships with Apple and Google) have allowed them to continue to be successful.
No, they don't "have to". But then they die, or just keep doing what they do. It's an option.
There are boundaries that sometimes protect business: geography, client base, product specifics, etc.