It's hard for me to imagine better evidence that Google needs to be broken up than this. Honestly, I think it should basically be forbidden for Ads folks to even talk to the Chrome team. This looks like textbook abuse of monopoly power when you use your dominant position in one area (web browsing) to juice your position in another area (ads).
Also, I think it shows the foolishness of any company thinking that "Don't be evil" is a position that can last over time as you grow. I know it's easy to look at Jerry as "the bad guy" in this situation, but he is simply reacting to his incentives ("if we don't make these changes, we miss our sales number, and if we miss our sales numbers, we don't get our bonus"). All big companies eventually revert to their incentive structure once they become big enough. This line of thinking also goes to show why Google has traveled down the enshittification path so strongly over the past 5-10 years. Easy for to me imagine how each little search result change resulted in more revenue and not a significant number of people leaving, until you are left with the situation we have now where the entire first page of any remotely commercial search is just ads, going directly against Google's entire original thesis for their existence in the first place. My guess is the relatively recent change of text from "Ad" to "Sponsored" is because fewer people realize that sponsored means ad.