Google still gets to mine all the email they receive for data, and if they use the same Google account (or maybe IP address) for anything else, use it to target the ads there. It also brings network effects, since you don't have to convince the user to sign up for a new Google account for some other Google service if they already have one for gmail.

Sure, it has some benefits. But if it can help push 60% of them to the Gmail app, if might be worth it to Google, even if it's to lose 40%.

And I seriously doubt it will lose 40% even. It's not like people have many decent options for webmail + mobile mail, especially if you exclude paying for it.