Well, not really - free is maximizing value creation, not value capture. Chris Anderson explained all this: "the world of free exists mostly to acquire these valuable assets [attention, reputation, etc] for the sake of a business model to be identified later"

It just so happens they already have a great business model, but they didn't when they released their search engine. They didn't make their search engine free to "maximize their profits"

Using very low prices to undercut competition and then later raising prices only works where there is some way to lock customers in. Japanese companies do it all the time (they have exclusive contracts to provide lock-in). This is extremely common in game consoles because the dominant console will have the most games which will tend to make it stay as the dominant console. In general, anything with high switching costs can make use of this. (Phone and cable companies also used to do this). I would argue that these kind of monopolistic practices are bad for the economy but should only be dealt with after it can be proven that a monopoly exists. Thats because government stifling of beneficial businesses is a far bigger danger than monopolies.

IIRC GMail isn't exactly making money for Google. I never thought about it before reading this, but I can see GMail being offered for free to drive people away from Yahoo and Hotmail. Chances are once you're on Google services you're more likely to use Google Search (which is where the money lies).

For example look at the nicely placed Search the Web box at the top of GMail.

They may not raise their prices right after major competition leaves, but by removing the competition, they do increase traffic.

So, even though they may not raise prices, they make it up on volume.

Taking a loss to kill competition was standard operating procedure for Standard Oil at the turn of the 20th century.