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I wouldn't say that means it's not FOSS, it just means things being FOSS isn't enough to ensure things are good.

This is a very misleading wording. FOSS is enough for everything unless a monopolistic megacorp forces you into their proprietary software (and your government stays silent).

And my point is throwing out all of AOSP because of that is throwing out the baby with the bathwater. Whatever other FOSS OS someone comes up with won't have Google Play Services built in either.

Oh yes, I fully agree. AOSP is the best shot at getting an alternative OS and sandboxed Google Play (like in GrapheneOS) is a good transition method.

Isn't AOSP developed behind closed doors, with infrequent code drops & zero community participation ?

Good luck building anything on top of that & keeping it in sync long term.

AOSP has yearly releases for the new major versions, but you can contribute code upstream.

You can use microG which provides a lot of Google Play Service functionality.

at the mercy of Google, yes.

???

No. microG is an ABI-compatible replacement for Google libraries, just like wine is a replacement for Win32 APIs.