It can actually be both; in fact it very likely needs to be:
1. Phone numbers are the best long-term identity most people have
2. Google has billions of users and needs to support account recovery at unbelievable scale
3. Many people lose passwords and devices, but very few lose phone numbers
It logically follows google uses phone numbers to assign and delegate identity on their platform. Is this bad for privacy? Yes, but it's also very good for security because it allows users to control their data using a third-party authenticated "credential" they don't have to manage.