Investors aren't falling for it. Users are falling for it.

Leaking millions for years pays off in the end, or even half way through. Some investors would exit at some stage. Taking profit due to valuation going up, despite no revenue/profit.

At the end of the tunnel is acquisition by a major player who is basically buying the users.

Typical examples: Skype, whatsapp.

But also LinkedIn. GitHub.

Businesses that offered some (basically) free offering for over a decade until reaching critical user base, then sold off for billions. Reason being precious data along with millions of daily active eyeballs.

Skype is ending this year. Some founders and investors won but only thanks to greater fools.

(notable that three of the four greater fools in your post are Microsoft)

May not be clear, even to finops at Microsoft. Skype tech ended up in Lync subsequent versions, aka Skype for enterprise. The user base also became a free ad target (to buy the entire consumers tool suite) I remember being constantly nudged to sign up for the free 30 days One Drive to backup Skype pictures and the jazz. So creative these heads of sales at MS.

Cheaper and harder to end up in spam folder.

It's shocking really that Microsoft didn't buy Slack and drive that into the ground too.

I'm glad to see WhatsApp is proceeding relatively slowly down the Shit-en-slide, since it's completely entrenched in some countries. I've had companies who just assume that I have WhatsApp and it's cool to message me on it instead of sending a text or email.

you can make something free and still profitable. Google search for example. I've been waiting for years to see something replacing it

I haven't used Google search in over a decade.