They have pulled back from that drastically, to the point where root doesn't really get you much control on an Android device any more. Whether that's driven by discovering that a very open approach to user control makes for a lot of security issues (which lines up with Apple's claims), or whether its about trying to improve revenue streams, well, who knows?
I think they stayed in that state for a few years, though.
For starters, it's something AT&T did with just the phones they were selling, not something Google did with the Android platform or Android phone makers like LG and Samsung did with their phones.
My point is that the mumblemumble seemed to think that Google had no choice in the matter. I think they clearly did and for the most part clearly opted to keep the third party door open at the time.
Granted, Android was much more open back then overall.
The AT&T analogy is kind of weak here because they weren't operating in the same business environment. AT&T was doing it in a B2C context, Google's Android business at the time was 100% B2B. It's easier to take this kind of risk as a major telecom operating in a B2C context, because consumers, as a body, aren't going to punish you that badly. Case in point was that, while these Android phones sold poorly, it hasn't actually tanked AT&T's business.
Whereas, if Google had sent Samsung, LG, Huawei, etc over to WebOS or wherever, the impact to Google's Android business would have been large and permanent.
Obviously having it for themselves was a key selling point.
Remember that this decision was made over a decade ago, back when there were many competitors - both software and hardware vendors - vying for a foothold in the smartphone market. Google trying to flex its muscles too much would have sent its licensees scurrying toward competitors.