Google is the fourth biggest public company in the world as measured by market cap.
A Microsoft 365 "E3" license is $20/user/month. They can afford it.
This restriction is entirely about eating your own dogfood.
Maybe I'm dumb, why wouldn't they be saving money by not paying for Office? Obviously they could buy it for every employee, including the majority that don't need it, but why? They could also just light money on fire (but why?)?