Full disclosure: I work for a competitor to both GCE and AWS. tl;dr: Until the fundamental issue of trust is addressed, customers will applaud the price drops only because they look forward to AWS responding in kind, not because they plan to actually deploy on GCE. In my experience, GCE has not been a factor in the public cloud market to date. They seem to have a fundamental misunderstanding in that they (apparently)…
The fact that Google does business as one might imagine an immature 13 year old might is troubling enough that I avoid them like the plague. The only service I use is analytics. Everything else is as though it didn't exist, docs, gmail, cloud services, etc. I don't trust them and I make it very clear to clients and associates that they should steer clear.
As you say, what I do like about Google announcing price cuts is that they are usually followed by AWS making adjustments.
If Google start behaving as adult responsible business people they have a shot at earning my and others' business. Until then I view them as teenagers more interested in popping zits in front of a mirror than adults conducting business in an environment of mutual respect.
Trust is one of those things that takes a thousand times more effort to earn back than it does to nurture and to keep.