Google agrees to reform its data terms after German antitrust intervention

This process predates DMA, and given that it's the cartel office and not a data protection authority (although from what I've heard, the German federal DPO was much in favor of this effort), the angle was more about competition than privacy. The quote in the article drives that home: "Google’s competitors do not have these data and are thus faced with serious competitive disadvantages."

You're not reading that correctly. Google tried to get away with one overly broad privacy policy, allowing them to combine personal data from various sources/services, and that is not allowed as per the decision.

It's possible to have a single privacy policy for a collection of services and different applicability of it for each single one, and for the interactions between them.

For example, some people might not mind Maps and Search data to be combined (both for ads and for recommendations) but object strongly against adding Photos or Mail into the mix.

As long as they had different privacy policies, users could opt-in into each one individually and data sharing was a difficult mess.

The single privacy policy fixed the mess (and made it easier for users to understand what's going on, too: just one set of rules), but removed some user choice while not giving a choice at all for certain new data uses (the cross referencing parts).