I seriously doubt this kind of stuff has ever messed with their bottom line. I think they just really resent users trying to do more with their service than they intended.

If they didn't crack down, people would start pushing it harder, until some company relied on this for cloud storage

I think this is a ridiculous sentiment, but I understand why it's so common. Proactively trying to head-off any and all possible problems before they cause measurable impact is not a great way to manage a product.

Maybe they did see impact, but I still would have rewarded non-abusive loyal customers for using the product—maybe restrict access based on resource-usage rather than hitting people with TOS violations. Instead this attitude (plus their generally very poor track record at supporting and improving their own products) has caused me to abandon all google products outside of work.

exponentially slower access and start corrupting them by flipping cases.

they would prefer that you pay them for storage rather than store white noise on YouTube from which they can't earn ad money.