Then the Goog enters the picture and is willing to add another $200k premium to that, in order to prevent you from working for that employer. This isn't sustainable; you're still you and your direct value to Goog is only $100k. The additional amount represents how much damaging a competitor is worth to Goog. As soon as the competitor goes out of business or Goog stops having piles of cash laying around to fight with other companies, that additional value evaporates.
If you decide to leave Goog, you should probably not expect to get $300k or more. In fact you may get less than $100k, if Goog has eliminated the competitors to whom you are valuable.
"Market rate" is extremely unstable.
This is true of everyone of course. Even a more or less commodity junior Javascript developer isn't worth much more than their generalized ability to do random tasks to a company that doesn't do any software development.
But some people have a skillset and track record that is very valuable to some companies but that would make it hard to be hired at most.
Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $1 is profit.
Then comes a company that makes its money on selling water and it is doing very well. It comes to a bread market and starts selling bread for $3.
The competition is quickly destroyed and the bread prices rise.
Edit: as a sibling comment mentioned: https://en.wikipedia.org/wiki/Predatory_pricing
Maybe 50 of the other 99 bakers at the 10 bread-selling companies are also capable of making good bread and will feel bad, maybe the company that lost the baker will feel bad, maybe that company will even fail because it turns out that really was their best baker... but in that case, it just proves that the water company was paying the market price for that baker. Which they were.
Spending more on talent is not predatory pricing.
Yes it does: Google makes money from advertising, not from self-driving cars.
