With Google not getting revenue from the Android store, they have no incentive to improve it in any way. They won't be nearly as concerned about their developers making money, either. It sounds like a terrible plan all around.

They do have an incentive... but an incentive to make developers use ads-subsiadised apps. Maybe that was their main strategy all along, and they told the carriers they could keep any money made on the store to get some traction (and to avoid the carriers creating their own stores).

Huh, I stand corrected. That's really weird; can they tell what carrier you're on when you download an app, even if it's over wifi? Definitely evidence toward Google favoring free apps and not caring as much about the Android Market as much as they should.