I mean isn't this just removing comp for commuting ? Assuming you got compensated based on commute time, 2 hours commuting a day does not sound worth the 10% to me - do some moonlighting if you're that bent on converting all your time to money.
I still think Google shouldn't do that, it's cheap to do that and they don't have to. However even with a 10% pay cut, employees moving from expensive areas such as Silicon Valley or the Seattle area to a cheaper one like some city in Oregon, the standard of living still goes up.