If you pay for an API, and it doesn't work, you can show economic harm and that gives you a basis to sue.

I know from experience that a number of Google's APIs are just some engineer's idea of how to hook into the data stored in the back end which Google puts out there for some easy (and free) goodwill but without any commitment ever to actually do the necessary foundational work to support it as a product (which they are really really bad at, in case you haven't noticed).

So the point is they use the API internally, exposing it gives them additional testing and additional feedback on how to make it better. Once the cost incurred by offering it for free exceeeds the benefits of the testing they pull it back. Continuing to use the now 'well tested and well rounded' API internally.

GOOG-411 was a great example of this. It was a great way to get voice samples from a lot of people by bartering a service. Once their voice training parameters weren't getting better they turn off the service, (cuts costs) but they still get the durable benefit of a well trained voice recognition library.