What did Google embrace, extend, and extinguish with Gmail? You can still connect to it with any standards-compliant MUA to download messages, and you can send messages to it like you would send messages with any mail server. Every user can talk to the rest of the Internet, and every user on the Internet can talk to Gmail users. So there is no extension or extinguishing going on; it's just another mail host that is functionally identical, from a standards perspective, to any other. You happen to also get a nice web interface for free.
Compare this to Exchange, which is its own system with a special client and special server. Good luck using offlineimap to sync your Exchange inbox.
But sure, let's talk about how Eric Schmidt was the Apple board during the development of the iPhone.
When Eric Schmidt was on Apple's board, he did not attend any meetings related to the iPhone, and then eventually resigned. He also got Android through buying an outside company, which did not sit on Apple's board.
So let's talk about the design similarities between Android and iPhone.
You press a picture of the phone when you want to make a phone call, and then your voice is transmitted over the cellular phone network to the person you're talking to? Icons are pictures of things? You can send and receive text messages and email from the phones?
Ultimately, any phone is going to be very similar to any other phone, because they are both phones.
And I don't think a company that develop's open source should be able to place ads on it, as to me, that is still 'selling' the software.
Interesting thought. When you write your own open source software, don't put any ads on it.
But it's worth pointing out that Google doesn't put ads in Android. Some providers even switch the search engine that Android uses from Google to Bing. The point of open source is freedom; if someone wants to make money with it, you can just delete that part. And people have done that with Android.