It sounds like showing those numbers already conveys the information you find useful; the question isn't whether the number of users is informative, but whether it's reasonable for Google to bucket apps into groups of competitors and then choose a threshold of minimum number of users to avoid actively discouraging additional users. I'm not opposed to the idea of owners of app marketplaces taking a more active step in curating things to try to help users, but this way of doing it seems pretty dubious.
That's exactly the problem in my opinion; most people will see the warnings and immediately just backtrack without investigating further, and in their shoes, that's not necessarily the wrong decision. I honestly think that having a warning like this isn't a bad idea, but that the heuristic being chosen for when to show it isn't a very good one, and as others have pointed out, it's a metric that benefits larger entrenched players at the expense of smaller competitors. It's hard for me to imagine that this isn't intentional, and that makes it even harder for me to trust that this is actually the correct heuristic to use given the obvious incentives they have for picking it.
