Yes but that doesn't mean the economic value is non-existent.

Theoretically Google could sell that space. They trade this potential profit to promote their own product, at a loss, of how ever much that space could be sold for. This is like economics 202, opportunity cost.

It's not that simple. It's easy enough to claim that showing a Chrome ad benefits users and helps Google's brand. Showing third party ads hurts Google's brand and overall value.

Only if the 3rd party project is subpar. largely chrome is a 3rd party project from the eyes of search. I'm pretty sure there isn't a massive overlap between search and chrome developers at google.