If they didn't develop Android they'd be paying $10s of billions annually for the prime positioning their apps and services and search enjoy too, so even if you buy their accounting tricks the development is paying for itself many times over.
But if the court allowed, Google would be paying that company $10s of billions for the prime real estate their software, search and services enjoy and it would then be a very weak argument that only IAP funds its development. Just like it is when Google earns $100s of billions in revenue from Android now.