Compared to a VPS or renting a dedicated servers, the egress costs can be enormous if you come even close to using the traffic contingent you get with many VPS or dedicated hosts.
Just as a comparison, a dedicated server with Hetzner for ~50-70 EUR per month includes 30 TB of traffic, which would be at least 2,400 EUR on the Google Cloud.
On another note, Softlayer used to have generous multiple TB allocations for their dedicated servers but they took them away. It's likely that anyone needing high bandwidth, especially for static content, will have other edge networks and CDNs in place for that use case.
But most of their money comes from the Netflixes and the Adobes of the world, not from mom-and-pop stores :p
I suspect that the smaller hosts' plans traffic quota is sold below their own cost - assuming (correctly) that the vast majority of customers would not use anywhere close to the limit.
The traffic quota also scales much slower than the price as you move to bigger, more expensive plans.
I guess that it's fine if you reach the limit on a few servers, but if you rented 1000 x $5 droplets from Linode/DigitalOcean, and maxed out all of their traffic quota, you would get kicked out. Has someone tried to use these hosts just for cheap file servers?
It might happen but it doesn't refute the parent's point:
"Right now Linode's and DO's smallest $5 plan offers 1TB of transfer, which would cost $85.00 on Google's new standard plan."
* It's hard to push a lot of useful data with a tiny VPS.
I think Google missed an opportunity here. They should have cut the prices more significantly for standard tier (sacrificing performance) to make this more competitive.
Right now Linode's and DO's smallest $5 plan offers 1TB of transfer, which would cost $85.00 on Google's new standard plan.