I'm not going to claim that it's broken, but it does seem a little odd in that the cost to customers is not aligned with cost to the hosting provider.
Slack's free tier only allows you to keep a history of something like 500 messages, which makes sense because storage and indexing of the message history are what cost money for the provider.
This product let's you store all you want for free (seems like a bad idea to me), while things with essentially no cost per user once they have been developed (like google auth) are the things they make you pay for.
Summary: for many services, the things that seem like they're expensive ("storage and indexing") don't cost much. The things that seem like they should be free (features) are expensive, even if there's no variable cost.
Details: Regarding "storage and indexing of the message history are what cost money for the provider," this is often not the case. Although at extreme scale (like any AWS product), it's absolutely true, for a typical Web app, the difference between, say, 5 and 50 MB of chat history is not what costs money. 2 things do:
1. Paying developers (that is, adding features). As you note, they have no cost per user, but they have a huge onetime upfront cost. Just because a feature doesn't have a variable cost doesn't mean that the cost isn't real and isn't distributed among n users[1]. Ideally, that cost should be covered by those receiving value from it.
2. Support and operations. Depending on scale, quality, and so forth, assume 10-30% of your payments go towards answering emails and keeping the service operating. Offering a feature like Google Auth does have a variable cost when, say, 30% of those who use it are going to ask a question, and answering that question well is going to cost $25 in time. Sure, a service could say "We don't offer support for free plans," but some services rightly don't want anyone to get stuck, even if they aren't paying. It's also harder to do thoughtfully than it might seem, since many customers who will eventually pay ask questions before they're receiving enough value to upgrade.
[1]: Again, a few services operate at such large volume that the implementation and support cost is a minuscule percentage of revenue. That's relatively few Internet services, though, mostly very high volume hosting. For other products, even all but the largest PaaS/IaaS offerings, the items above are substantial costs. Some services which would otherwise be lower-volume use this as a differentiator ("Everyone gets all features"), and that's great, but there's no reason to expect it universally.
You are on Hacker News, yet you think that that's odd? It's a common wisdom among entrepreneurs that you price your product according to what people find valuable, not according to what it costs you. For example https://www.smashingmagazine.com/2011/09/youre-pricing-it-wr...
Same reason a 32GB iphone costs hundreds more for the next level of storage. And why 64gb is pretty much the largest offering. 64gb isn't enough? Pay for more icloud storage. Yet you can buy a 128gb sd card for $30.
Slack's free tier only allows you to keep a history of something like 500 messages, which makes sense because storage and indexing of the message history are what cost money for the provider.
This product let's you store all you want for free (seems like a bad idea to me), while things with essentially no cost per user once they have been developed (like google auth) are the things they make you pay for.