So we could come up with a hundred explanations for why Google took this action in this thread, some cynical, some conspiratorial, some altruistic and idealistic. And frankly, half of them would probably be sort-of correct, in that one or more of the decision-makers and their advisers might have considered that point or used it as a basis of their decision.
Occasionally you can state cleanly, "Company X did Y because Z", but it's usually more complicated than that. And when it is a case of "Company X did Y because A, B and C and despite I, J, K", you rarely have the information to reason out all of the variables that went into a decision, unless the matter is of such historical importance that you get the 27 books written after the fact based on years of investigation and interviews.
Consumers don't expect to be GPS tracked everywhere and have companies profit on that data. Granting location permission to us here means that because we know, but most people would consider giving weather.com access to your location just helpful to get your forecast. Even if it is nestled in the privacy policy. What is next? You download a camera app and then every photo is sent to someone who turns AI on it to learn about you? (could already be happening) Oh but it was in the privacy policy that we may share data with third parties.