You need to remember that android's customers aren't the end users of the phones, its customers are the OEMs. Spinning off android into its own company separate from Google wouldn't mean the end user gets a preference of which mapping or search app to install, it means the company selling the phone (either the phone brand or the cell network) gets to choose.

You have the option as an Android provider to use android and provide your own services OR ship the device with Google Play services. Amazon for example does the former.

I actually think Android is a really bad example precisely because all the useful google apps ARE separate from the OS. Its just that what people think of as android is actually mostly Play Services now.

And tbh - most people would still probably download google chrome, google maps, google docs etc - it would just level the playing field

OK but Android is a loss leader for Google's search business. If you spin off Android and Android is no longer subsidized by the search business doesnt that either

1. Raise prices for customers since now someone has to pay for Android development/upkeep/progress, or

2. Starve and kill Android and leave customers with just one major app store (Apple)?

So basically big companies will no longer have any reason to work on open source projects anymore if they can't fund them with "unrelated services?" You can head over to github, clone the AOSP tree, and do whatever the heck you want with it. Separately, Google has developed the Play ecosystem, and several of its own apps for Android. If you want you phone to have that stuff, you tell Google and you join the Open Handset Alliance or whatever its called now. If you don't, you start from AOSP (as does Amazon, for example) and don't give Google the time of day. So they give away a massive boost to anyone who wants to make a mobile device, and somehow that's a bad thing?