I'm not a Googler, but my impression was that Google mostly holds themselves to this standard. Youtube routinely demonetizes videos with questionable content and blocks ads aimed at racist keywords.
"It would be a double standard if Google refuses to display advertising on other third-party websites alongside racist user content, but then displayed advertising on their own first-party websites alongside racist user content."
Google clearly states that they have automated detection of racism, so highlighting examples of Google displaying for-profit advertising on racist speech in Google Groups posts or YouTube comments would be vastly more meaningful an argument that they're applying a more restrictive standard to their customers than they apply to themselves.
Either Google does hold those of their own sites that display advertising on user content to the same burden of moderation that they demand from the advertising customers — or they do not, and are therefore hypocritical to do so with others. Whether or not section 230 exists, or is applicable, it simply doesn't matter.