I think that this announcement is great news for the Open Source movement.
How exactly can vendor lock-in occur? or restriction to one provider? The OS will be open source. There will be forks of the project within days, and totally new "based-on" distros and extensions within months. These projects will do whatever their teams have the resources to pull off, and that will certainly include making a basic build platform on which to build existing code. Quite interestingly for us, they'll all (apparently) be starting from a 'small / quick / light' base. (by some definitions of those words!). If Google succeeds at getting OEMs to install it, you'll be able to buy a lot of of very cool (light but modern) hardware without any Windows tax, and---just like any of us would now if we bought a Linux netbook---you'll be able to upgrade the OS on that hardware to whatver distro of Google OS, or TinyCore 5.4rc3 you want.
I could imagine that there will be some interesting work done in the process of building a Linux system up from such a minimal base that will help TinyCore. In a similar way to how we now benefit from, say the Puppy Linux community's work to help Xvesa be usable on newer hardware.
The 'new windowing system' may even turn out to be of interest to TinyCore.
Whatever the capabilities of the original release (which I suspect will be more than just a 'browser on a stick'), the impact of the OS will go far beyond that. I'm suprised Richard Stallman hasn't come out with accolades. I think this is the real beginning of what he's fought for all these years. Finally we can have proper re$ources working together with us little guys, to make free (re-distributable, changable) software that anyone can use.
Sure, there could be ways to lock users in, (burning the OS in as unchangable firmware is the only one I can think of), but nothing I've heard so far gives me any reason to think this is anything but a Very Good Thing for those who use and advocate Open Source / Free software. Or?