Well, we use flash models extensively (both 2.5 and 3.1) and I cannot overstate this, google cannot fucking serve them without 503s 70% of the time on most days

I think it’s pure economics. Flash models are OP for the price, leads to too much demand, google cannot serve it. This is likely expensive to reduce load and hey, if it still makes money just keep the margin.

Rumor is that GCP was happily selling compute to competitors. After all, under the hood, Google is closer to a federation than a corporation. The state of GCP doesn't care about the state of Gemini.