This is the explanation that I find the most compelling and at the same time, the hardest to fully grasp. The reasoning goes that what is good for the web in general, is good for Google. Having access to nice web fonts is good for the web so that will eventually translate into increased revenue for Google.
Two Google engineers give an in-depth talk on all things Google Fonts in this hour long video.
Why web fonts? Why would we care? The way I think about it is, the web is core to Google—there’s no doubt about that. And fonts are core to the web. And so we see web fonts as a really exciting technology that we could use to improve all our products.
David Kuettel, Google Fonts Engineer
It’s no secret that Google makes most of their money from advertising. If the internet in general works better and looks nicer, humans will use the internet more. And using the internet more means using Google more. And therefore more ad revenue for Google.
I like this reason but it just seems like such a lofty and difficult to measure goal. “Look how gorgeous Open Sans looks on this website! Next time I do a Google search I’ll be sure to click on more AdWords ads!” How on earth could you measure that? It’s such a roundabout way of doing things and seems like it would be hard to justify to management, especially now that Google answers to shareholders.
Default system fonts work just fine for displaying text so I have a hard time believing people would actually use the internet less if Google Fonts didn’t exist. However, Google is a unique company and indeed invest in other projects such as the mysterious Google X that I’m sure are way harder to justify to shareholders than a fonts project.
Projects that Google X has considered and rejected include a space elevator, which was deemed to be currently unfeasible; a hoverboard, which was determined to be too costly relative to the societal benefits; a user-safe jetpack, which was thought to be too loud and energy-wasting; and teleportation, which was found to violate the laws of physics.
Wikipedia article about Google X
So out of all the reasons, I’d have to go with this one being the most likely reason for Google providing their web fonts service.