I don't speak for Google, however I was involved in Summer of Code from the open source side when this decision was made. The reason given was that they were concerned that the amounts were having a disproportionate impact on some students, paying significantly more than the jobs it was meant to compete with to the extent that getting into Sumner of Code was one of the main objectives for students rather than a nice to have.

I can tell you that when it was announced it was a very unpopular move with the mentoring organisations, where the strong feeling was that equal work deserves equal pay, but ultimately the decision for mentoring orgs is to participate or not, and the vast majority chose to participate.

It wasn't like this when I participated (2013). ~5500 USD was the flat rate wherever you were from.