I just made a new Google account a couple hours ago, and it definitely looks like the preferred mechanism.
- There's one stage in the signup flow you can't bypass without SMS (granted, it doesn't automatically save that number to the account if you opt out, so that's nice).
- When setting up 2FA you're given giant messaging encouraging you to use a phone number. There's tiny text for other 2FA options.
- Those other 2FA options don't actually include TOTP. To enable TOTP you have to enable a "primary" 2FA solution (SMS, hardware key, or push notification), then enable a "secondary" 2FA solution (which can include TOTP), and if you're concerned about the shitty security SMS provides you then need to remove that as a 2FA option.
Edit: Mind you, it's probably reasonable given the state of the rest of their ecosystem to not have TOTP as the 2FA for your Google account (like if you have a chicken and egg problem trying to get into an android device with a TOTP app), but TOTP doesn't seem to be anywhere near as preferred as SMS.
That, and they do support hardware tokens out of the box (even if the UI doesn't make that super clear), so that's a step in the right direction.