From outside, I found it to be a dubious move myself.

ChatGPT went first, nothing Google does will change that, that's too late. The only thing they can do if they don't want to lose face is the "we didn't make it available because we want to do it well" strategy. It has been used many times by Apple when competitors beat them at some features, so much that it has become a meme at some point, but it worked.

And I've seen hints of Google going in that direction, pointing out things like reliability issues most people came to know about by now, implying that they already can do what ChatGPT can do, but unlike their competitors, they don't release half-assed products.

But their latest announcement breaks everything, they are essentially admitting defeat. They didn't manage to be the first to market, and they can't claim they took their time to release a quality product instead. So it was either a terrible communication blunder, or they really didn't have much choice, with the latter being a real possibility, I understand investors reactions.