Minor price differentials only matter to big sites. But that's also where the cost of moving is the highest. Would you move reddit.com to Google for a paltry 10%? You'd have to think really hard about it, for sure. Maybe you have cheaper optimizations that could get you that 10% instead.
I don't think they expect people to migrate in waves but I think there will be a time when "we know AWS" isn't a sound argument. There are plenty of projects to come that can evaluate both on their own merits. It's what each does from today that will answer those questions.
Also, GAE no doubt will play a role. I'm interested to see what comes of Cloud Endpoints (REST APIs) and other integration we can get between the two. I think this opens up some very interesting possibilities but I won't get into that.
And let's not forget that not everyone is thrilled with AWS. It's a great service but it has flaws. Google can afford to make a long-term effort to build a solid product that goes head-to-head with AWS.