At Google's scale I would have guessed that they would have had no difficulty in matching and even beating Amazon's pricing. This is surprising. Why so?
Perhaps they're looking to grow the service slowly initially? If they announced pricing significantly lower than amazon's right at launch they'd get a flood of new traffic that could overload however much resources they provisioned for launch. By starting out with a slightly higher pricing model, they can test out the service with production customers, and slowly reduce prices to attract more business when they're confident they can handle the load.
