I was actually surprised at Google's willingness to offer Gemini 2.5 Pro via AI Studio for free; having this was a significant contributor to my decision to cancel my OpenAI subscription.
Microsoft gained control in the '90s by bundling Internet Explorer with Windows for free, undercutting Netscape’s browser. This leveraged Windows’ dominance to make Explorer the default choice, sidelining competitors and capturing the browser market. By 1998, Netscape’s share plummeted, and Microsoft controlled access to the web.
Free isn’t generous—it’s strategic. Google’s hooking you into their ecosystem, betting you’ll build on their tools and stay. It feels like a deal, but it’s a moat. They’re not selling the model; they’re buying your loyalty.
There's very close to zero switching costs, both on the consumer front and the API front; no real distinguishing features and no network effects; just whoever has the best model at this point in time.
Yes but that can take decades, till that time Google can keep making money with sub standard products and stop innovating.