What's actually going on here is a lot less sensational than the title appears to suggest: as far as I can tell, Google is just deprecating an old plugin architecture to encourage developers to move to a newer one.
On the surface, this has technical reasons, but actually it is more about control of the platform. They are especially killing all plugins that allow fully featured, networked applications - Java, Flash, Silverlight/.NET.
This is similar to what Apple did with iOS - they couldn't outright ban the internet, but they made it impossible to circumvent the app store. You can't write a HTML game that uses graphics as advanced as a native app, and you can't write a web app that accesses arbitrary (non-cooperating) network resources. You have to go through the app store, Apple get's their 30% share. You can't write guerrilla apps that aggregate data from non-cooperating sites, or that do e.g. P2P file sharing - if what you're doing is illegal (or not wanted by Apple) in US jurisdiction, they have you're address, and you're in trouble. You can't even write a runtime or a tweaked browser to circumvent all this, as they explicitly forbid it.
The reasons why Google is pushing a similar strategy are a bit hazy. But it's clear that rich clients are a threat to Google's business model. Google profits most if everything happens in the web.
This is part of a larger war on general-purpose computing. Just look at the Metro apps in Windows 8/RT, the fact that OS X by default now only runs signed applications, or ChromeOS.
Among the popular plugins that have been temporarily whitelisted along with plugins like Flash and Silverlight are Google Talk and Google Earth are among the plugins that will be barred. Thus this looks like a fair and logically consistent move.
I only hope that we can keep DRM out of the open web as long as possible and have it die when plugins die.
