There is demand for search APIs, and companies like Kagi can build a business around that, grow and then compete more generally with Google over time. Serp makes that difficult.

For competitive reasons Google might not want to sell a search API directly (they might indirectly fuel a lot of competition against their main ad supported product). So letting Serp offer this service in a bit of a gray area makes it hard for competitors to form a beach head in search, while giving Google legal flexibility to shut down any service that tries to compete with them in any way through Serp's data.