Hmm... if I recall correctly, originally they were going to shut it down completely. (I certainly see some old articles about that, from a brief search.)
I think there was enough pushback from people willing to pay that they decided to keep it open as a paid service instead.
> UPDATE June 3: In the days since we announced the deprecation of the Translate API, we’ve seen the passion and interest expressed by so many of you, through comments here (believe me, we read every one of them) and elsewhere. I’m happy to share that we’re working hard to address your concerns, and will be releasing an updated plan to offer a paid version of the Translate API. Please stay tuned; we’ll post a full update as soon as possible.
I think there was enough pushback from people willing to pay that they decided to keep it open as a paid service instead.