Another Reason Google Reader Died: Increased Concern About Privacy and Compliance - Liz Gannes - News - AllThingsD

Check the post link for more details including speculation about the Google Reader user base size

"That means every team needs to have people dedicated to dealing with these compliance and privacy issues — lawyers, policy experts, et cetera. Google didn’t even have a product manager or full-time engineer responsible for Reader when it was killed, so the company didn’t want to add in the additional infrastructure and staff, the sources said.
But at the same time, Google Reader was too deeply integrated into Google Apps to spin it off and sell it, like the company did last year with its SketchUp 3-D modeling software."

Another Reason Google Reader Died: Increased Concern About Privacy and Compliance - Liz Gannes - News - AllThingsD