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I don't understand why Google does this. If I can run this locally, why would I need a subscription or use any inference provider, including Google..?

Scorched earth tactics to make anthropic and openai IPO fail?

It's a disruption game - releasing competent open models disrupts smaller labs trying to release their own or commercialize their own. It's a similar rationale behind the Chinese labs releasing near-frontier open-weighted models, the goal is to disrupt and lift the barrier of entry for would-be competitors.