Some context here
I've worked in online advertising since 2004. Google has changed significantly since 2020.
This reversal in tracking is because it's seeing major tracking issues with the current set of privacy restrictions. The scale of the issue of tracking is an unimaginable number.
Advertisers are pulling back because they loose visibility of their budgets. These budgets are going elsewhere (other networks). In response, Google has taken away the ability to see performance data at a granular level with some campaign types, this means ads get plastered in far more places, monetising their networks better.
You can see this first hand with the relentless push for video ads on YouTube.
Google is trying to recoup the revenue caused by the tracking fallout.
It has also grouped its sub standard networks (banners, email, video, in-app, mobile) so it is able to spend across them without the advertiser having full control (again to make up for lost revenue).
Also, I truly believe Google is single handily responsible for pushing up the costs to end users like me and you for virtually every produce and service.
They have realised so much business starts online, it has started to raise the floor prices of the bidding auctions so significantly.
Advertisers are paying double, triple even quadruple what they were 5+ years ago. This is squeezing margins for retailers and businesses so much that these retailers have to resort to more aggressive revenue generation tactics, just to keep growth. This means cutting costs, reduce product quality, size, quantity or forcing people onto subscription models. Google do it because they can, because there is no regulation, they have a monopoly.
The end user looses out. Despite the push for more privacy, this has mean't we are inundated with advertising, in more places, across more networks, in more products. The actual end result (product or service) is in some cases not what it was years ago.
I made the mistake of leaving Google to its own devices on some campaigns recently. Meaning they can set the bid price. In this particular case the industry did not have many competitors and the actual product had fewer competitors still. Despite that google guessed what the bid price would be and it turned out to be £80 per click. It is pure theft. It is desperate for regulation. Where I the fairness, imagine walking into a shop and the owner decided to dynamically change the price based on how they felt. I under the auction model, but there were virtually no competitors and the price of £80 a bid for the click was not in context to the product value.
This is not a post to advocate advertiser visibility or more tracking, this is to demonstrate what originally started as a good intention, to protect users, had lead to more aggressive advertising, inundating us with more and squeezing retailers and businesses which had either affected product quality and the turnover of businesses stagnating growth and jobs.
Google is re-writing the auction to favour big corps or companies with big budgets, taking away controls so its ads show for far more search queries and hiding controls and merging network targeting options to make sure more ad slots are sold. It is tracking you with "cookie-less pings" but people think they are private.