Google Search users aren't Google's customers. Making Google Search useful to its users is not what makes it profitable. It only needs to be mildly better than the competition, so that people use it and can be used for collecting data and serving ads.

So GP may not be "an unprofitable long tail". GP may in fact be "a profitable typical long tail for whom Google Search is frustratingly unhelpful".

I'd be surprised if there was a long tail of customers. There is probably a long tail of searches for most customers.

Google giving up on difficult searches and focusing on showing promoted links, AMP sites, and "rich" result boxes is probably a sound business strategy too, and is unlikely to make users switch search engines this late in the game (Bing/DDG don't seem to do better anyway).

I'd guess because people who are looking for something specific, are more likely to buy the damn thing if they find it, if it's something buyable.