That only works when there's no competition or the competition isn't serious enough. But as soon as something like Google Fiber comes out, they start freaking out, because they know customers have developed a lot of resentment towards them when they kept thinking "why bother improving the service?", and they will quit them as soon as a much better alternative is available.
The same can happen to Google, too. Imagine if this was Microsoft coming out today and saying they are going to implement PGP or something even better for true privacy - and imagine then they would do campaigns like Scroogled and Gmail Man. Now do you still think it's a mistake for Google to do this from a strategic point of view, so they don't lose customers in the future?
If Google wants Gmail to remain the #1 e-mail service, then they need to do such moves first, not as a reaction to other competitors. Because by then the exodus may be too hard to reverse, if the perception of Google's services becomes much poorer and they've lost most users' loyalty (not necessarily the users themselves up to that point - but the loyalty of those users).
If you want to argue that Microsoft will come out and implement PGP, that's one thing. Hell, maybe Google will decide that it's more profitable to shut down Gmail. Would that also be a mistake from a strategic point of view? I couldn't fault them for it.
But all you have are wishes and fantasies. That's not strategy. That's a pipe dream.
Since this answer is "an insignificant amount", I think you'd be happier if Google looked at it the wrong way.