Lovely argument you have there. It boils down to this:

"Perhaps you are not subjecting yourself to monitoring by Google so that they may further monetize your Internet history."

My initial argument stands:

"If security keys are so great, why is Google subjecting me to so many CAPTCHAs? Perhaps it is because they want free work. A password and security key challenge should be all the proof that Google needs."

I've had similar discussions before. I've even had someone call me a criminal for running an ad blocker. I'm not fond of the word shady either.