You're correct to point out that there's no swindling or bait-and-switch happening here. I get to keep my Google Apps account for free. Google did the right thing.

I think what we're reacting to is that the free tier of Google Apps doesn't seem any different (from a cost perspective) from regular Gmail. They're giving me the same storage, showing me the same ads, providing the same no phone support, etc. The real difference is that I get a custom domain which doesn't cost anything to Google.

$50/user/year also seems expensive if you're not going to use the value-add of the business plans (phone support, 25GB inboxes, etc). Maybe Google could have kept the old system as well (7GB storage, ads) and charged $5/user/year for the vanity domain. $50 is just a lot for what is, frankly, more vanity value add than anything else for many of us. Yes, if you want 25GB inboxes, no ads, SLAs, etc. Google Apps can provide good value add, but I don't need those things.

Google is a private business. What they announced is reasonable for a private business trying to maximize profit. However, it feels less reasonable when one thinks about the cost to provide services. The free Google Apps shouldn't cost more than the free Gmail from Google's perspective. As such, I think it's human nature to say, "then why are you charging more?" "Because they can" is a perfectly reasonable answer, but it does make us think less of Google. Google is the company pushing the Nexus 4 down to $300 to try and prove that top-grade equipment can be more mass market rather than trying to maximize profit with a $500+ Nexus 4. That's the ethos and drive that we've come to love. What Google has done is perfectly reasonable and, in fact, better than most businesses would have done: most businesses wouldn't have grandfathered us in. However, it just doesn't feel like the same Google that turned so many businesses upside-down. In short, it doesn't feel like Gmail. Gmail came along with 1GB of free storage when you got ~10MB from competitors - and Google made it into a profit center pushing the bounds in a way that made them rich and improved our lives at the same time. This just feels like a regular business trying to make money - and that just doesn't feel like Google to us.

Again, I'm not saying that Google doesn't make a ton of money or that they shouldn't or whatnot. I'm merely pointing out that Google's profits often come alongside something that genuinely makes our lives better. Our world is better because Android exists. Our world is better because Google entered search. Our world is better for YouTube. Even AdSense brought relevant ads that were less obtrusive. They're all wonderful for Google too, but they pushed us forward. This doesn't feel like that. This feels like an MBA sitting in a room looking at the number of free Google Apps accounts and thinking "I bet we could convert some of those free-sign-ups into paid ones if we discontinued the free product in the future".

I want to emphasize that Google doesn't owe me anything, but when you see two services that cost the same to provision and one getting priced upward, it just feels icky.

For anyone who might be looking for an option for the future, Zoho offers a free tier for up to 3 inboxes: https://www.zoho.com/mail/zohomail-pricing.html.