I’ve been thinking about this all day and it just doesn’t make sense to me. I was hoping someone here would have a well-informed opinion/answer.
Google domains seemed like a natural tool in the GCP and Google ecosystem. It provided one-click access to setup website, Google workspace, provided direct verification in Google Search Console and Google Analytics, and just made sense.
Unlike some of the other investments like Stadia, domains is also not capital or resource intensive. They never offered discount on domains, they sold them at standard prices. The team working on domains must be small. It’s also a low risk project. Why would they kill it?
What next? They’ll sell Google Fi to T-mobile and abandon Google voice?
Domain registrars end up with a long tail of customers holding small numbers of domains. If Google sells a .com for $12, most of that goes to Verisign, and they're stuck with a customer who will get agitated when "their domain doesn't work." Many registrars use domains as a way to upsell hosting or premium domains (e.g. GoDaddy, Namecheap, Gandi) but the median Google Domains user is unlikely to be attracted to GCP.
Google dislikes having to deal with customers at scale (free users are fine as you can ignore them) and domain registration is high on the list of businesses where you end up with large amounts of customers expecting a certain level of service coupled and almost no margin to provide it.