A fundamentally better service may be strangled in the cradle by Google operating at a loss for years and then shuttering the service, raising prices, or making some other negative trade off.
Not necessarily. It'll always be a small project for a company like Google and will eventually be merged into some larger corporate structure (YouTube Game Stream or whatever). It'll take product cues from that larger entity, so won't be as dedicated to propose as a small start-up would be (already in this thread we've discovered the site is Chrome only). But it'll still dominate enough of the market that the small start-up will not be viable.