Swift said she made the move because she did not agree "with perpetuating the perception that music has no value and should be free".
However Bragg accused the star of not being honest with her fans.
"[She should] say 'sorry, but [Google] gave me a huge amount of money... so I've sold my soul," he said.
Writing on Facebook, Bragg said: "What a shame that Taylor Swift's principled stand against those who would give her music away for free has turned out to be nothing more than a corporate power play.
"These worthy sentiments have been somewhat undermined by Swift making her new album and back catalogue available on Google's new Music Key streaming serviceâ€¦..which also offers listeners a free service alongside a premium subscription tier."
The musician suggested Swift's withdrawal from Spotify was intended to maximise sales of her latest album, 1989, which has topped the charts around the world.
"If Ms Swift was truly concerned about perpetuating the perception that music has no value and should be free, she should be removing her material from YouTube, not cosying up to it," Bragg said.
"The de facto biggest streaming service in the world, with all the content available free, YouTube is the greatest threat to any commercially based streaming service."
Bragg has been vocal against YouTube's new Music Key service.
He accused the company of trying to "strong-arm" indie labels into agreeing to "low rates" by threatening to block their material if they did not take part.
Bragg's own music featured on the service, as it was included as part of an agreement signed by a company representing indie label, but he previously told the BBC he had not been informed of the details.
"Google are going after Spotify and Taylor Swift has just chosen sides," Bragg added in his Facebook post.
"That's her prerogative as a savvy businesswoman - but please don't try to sell this corporate power play to us as some sort of altruistic gesture in solidarity with struggling music makers."
A spokesperson for Swift said: "Taylor Swift has had absolutely no discussion or agreement of any kind with Google's new music streaming service."
Singer and activist Billy Bragg has called Taylor Swift's decision to pull her back catalogue from Spotify a "corporate power play".