DNS is so cheap, and Amazon Route53 has such an advantage with their latency based routing, health checks, and integrations with other AWS services. Honestly zones are $0.50 and $0.50 per million queries. You have to be pushing lots of DNS queries to have costs even exceed a tiny bill of $20 a month.
It is the definition of a lot of engineers hours and infrastructure costs for literally no profit for the company. However, it is a basic service every hosting provides has to offer to be competitive.
Given their other Cloud-oriented offerings (Compute Engine and App Engine), I'm not so sure they are doing this to make gobs of money. It's a hole in their service portfolio that they are filling. This can indirectly lead to people being more comfortable choosing Compute Engine, increasing adoption and earning Google more money as a whole.
AWS has Route 53 (which is probably not a huge money maker), Google needs to match them on this. I expect Google's offering to improve over time technically, just like Route 53 has. DNS is but one piece of each company's portfolio, but it's such a critical piece that it's expected to be there.
Unless your app operates at a truly massive scale with a very specific set of characteristics, this won't save you even a minuscule fraction on your total budget. Route 53 is dirt freaking cheap.
It is the definition of a lot of engineers hours and infrastructure costs for literally no profit for the company. However, it is a basic service every hosting provides has to offer to be competitive.