I think a more significant factor is growth rate. Free stuff can grow orders of magnitude faster than anything consumers buy for the simpler reason that signups

I think a more significant factor is growth rate. Free stuff can grow orders of magnitude faster than anything consumers buy for the simpler reason that signups or downloads can be zero friction. Even a little friction slows down growth. The game online for a very long time has been: grow as fast as possible, then figure out a way to monetize. Free wins in this game, making it almost impossible for anything paid for by the consumer to compete. So thus we have today's world where the game is: grow fast with free, then enshittify once your network effect has locked everyone in. It works incredibly well.