Except that all the income the ice cream vendor made was made from giving away the flyers, you've reduced their effectiveness to the point where the flyers no longer bring in the money and he has to close up shop.

Now in the case of google that's a stretch, but this is not 'ok because it is google', neither would it be 'illegal because the party it is done to is small and vulnerable'.

It's either 'ok' or it is 'not ok' not taking in to account the size of the party it is done to.