The problem is an ads company owning a web browser, OS, and search engine, and using that control over how users interact with the internet to outcompete everyone else. You left out Google's raison d'etre from your statement.
The problem is the anti-competitive behavior. Businesses are generally rational actors, so clearly our system isn't working. It's unclear what the boundaries are until years in court, and even then it only applies to a single company.
Google's product isn't its software, it's the attention of its users. Having this large and this dominant of a software/data platform attached to a company that sells attention is anti-competitive in the attention market.
Incidentally, this sort of proves the point that Google's ownership of platforms where ads are displayed puts them at an advantage compared to competitors, who have to go to people like MS for space.
Maybe our difference in viewpoint is that I see this fact and wonder why it's seemingly impossible for anyone to build a financially viable alternative, and I'm at least open to the idea that it's very difficult to compete with Google when they can leverage their successful ads business to subsidize the investment into their browser.
Yes the alternatives are worse, but is that because Google is inherently smarter, or because the newcomers have a tiny fraction of the investment and usually fizzle out within a year or two? Google doesn't have to be actively trying to kill the competitors for it to have an anti-competitive effect in the market.
Why is an ads company owning a browser any different than a phone company (Apple) or an operating system vendor?