I think someone who's committed murder is a perfect analogy actually. For people who serve their time or whatever after committing murder, there's no legal standing for not employing them. You might feel uncomfortable as their coworker, which is totally valid. You may also believe that there is no forgiveness or second chances after committing certain crimes like rape and murder. But unless the employer has a good reason why an ex-murderer cannot perform their work duties or is currently doing illegal things at work, I don't think they can not hire them just based off of that.
Maybe the problem is a lot of their marketing relies on the dominance of their search engine (ie sponsored search results, and ads based on user searches, as well as tracking user web usage via their search click throughs and other cookies). If open ai's products become the go to for questions and basic searches, they will eventually be able to use that dominance to include marketing results in their answers. I think this threat is why they want to try to compete with them to be able to offer an alternative. Because it doesn't actually have to be better than chat gpt. It just has to be similar enough for people to continue using Google rather than change their habits to use chatgpt, or Microsoft's implementations of it. Especially with windows 11 where copilot (basically Microsoft rebrand of chatgpt) is built in and you can use it from the task bar. That ease of use may steadily decrease people's reliance on Google search, which will eventually hurt their ability to sell targeted ads.