The "might as well give away the ad credits" part makes sense to me, but the part about inflating prices and getting a higher tax deduction doesn't make sense.

I'm not an accountant by any means, but I don't see how there even would be a deduction here. From what I could quickly dig up, even if you donate your services to a nonprofit, you can only deduct your costs, not the price you'd normally charge a paying customer. And of course this isn't even a nonprofit; it's just a freebie to a business.

So while cutting supply might create higher auction prices for paying customers (than you'd otherwise have), the grants themselves don't seem like they'd do anything advantageous for taxes.

Of course, there are expenses with serving ads that they can take out after revenue to reduce how much profit they'll be taxed on, but I'm not sure there are many expenses coming from this giveaway. Seems they would have incurred most of the expense without doing the giveaway because they've already got the computer hardware up and running to serve ads. This is just a way to try to get some value out of the expense that you're going to pay anyway.