And then it took them a while to decide that leveraging the open source ecosystem would be better than maintaining those various proprietary elements.
And to your second point, it is interesting that OCP (some of it perhaps influenced by people who had worked at Google and then later worked at Facebook) appears to have minimized some of the advantages Google had, and now they find themselves possibly getting behind (one of the nice things, and bad things, about open projects like this are that you get a lot more resources applied to making things better than one company can muster).
For similar reasons I wonder if ARM will displace x86 if only because there are probably 15 to 20 independent teams of smart people with ARM architecture licenses making better ARM processors, and perhaps 4 such teams at Intel making improvements in the x86 architecture. At some point it seems "open" seems to eventually overwhelms "walled garden." Although I'm totally open to counter examples where that hasn't been the case.
Rackspace has largely abandoned the project after initially opening it up, and public clouds based on Openstack seem to be getting shut down left and right (I could go on a long rant about why that is the case, since I am an Openstack contributor :)
The reason, apparently is because Google can no longer sit comfortably behind the scene to watch others play the catch up. Previously Google do not care, because they dont want to share internal Cloud with you. Now they need the profit from Cloud. Google needs to show that it is still the leader. Previously, Google does not need to show anything and all believe they are the leader. After missing the Cloud movement in the past years, Google's reputation has been tainted, and they have to show hard proofs.
For example, when choosing cloud providers, AWS is still the clear no1. People probably still believe that GCP is better than AWS. But GCP does not have the proof. However, if Google somehow can catch up and beat AWS in a decisive manner overnight, then Google still does not need to share anything; and no one will question that Google is the leader. Apparently, Google is not able to do that. It might be that Google is not focused enough. But Google cannot let people have the other impression "Google's technologies might not be as good as we thought" grow in people's mind.
Can you imagine what would happen if Google started the Cloud thingy at the same time as AWS? Then Google certainly do not need to share a damn thing with outside world...
https://news.ycombinator.com/item?id=11260137
And last month Spotify did the same thing.
The price differences between EC2 and GCE, especially with Custom VMs, is massive. Up to 40% according to this:
http://www.zdnet.com/article/what-google-says-to-aws-price-c...
To address your last 'if' scenario - notice that Amazon, as a large online retailer, had a compelling reason to offer up the use of the infrastructure they had to build anyway, which was over-provisioned for most of the year. I don't have numbers, but I would be surprised if Google has anything close to the kind of seasonality Amazon experiences.
Once it became clear that Amazon was onto something with this whole utility computing/cloud thing, the rest had to play catch up, and continue to do so to this day.