Google failing to meet it's own motto? "Don't Be Evil"

Google has been upset with website Groovle, for the similar domain name to Google, Groovle is a search engine site that uses Google's own Google Custom Search, to create a search site where you can pick designs for the home page of the site.

Google basically created it's own competitor and now they want to shut it down, Google argues that users may confuse Groovle with Google. Groovle has made significant steps to try to appease Google without shutting down. Groovle has made their logo stay different from the Google logo, and they have added a disclaimer stating they are not affiliated with google.

So I have one question to you, is Google being evil here?