With each AdWords display change, Google's been adding billions of dollars to their revenue by confusing and fooling their users and blurring the line between the content and ads. A visual guide: "A (mostly comprehensive history of Google's ad shading and labeling" https://i.imgur.com/0RxdzBE.png
For branded keywords, it's not just shady, it's racketeering. You wouldn't want your competitor to show up first when someone searches for your brand, would you? Then pay up. E.g. https://i.imgur.com/SfomkdQ.png ; the second result is a competitor's ad, the third result is the organic result.
It's like saying that you want to regulate what can advertising companies display on billboards, ex. they cannot display competitor's ads nearby your company's offices. Since the billboard space is private and owned by the ad company (similarly to the ad space on Google servers served pages), they get too decide to put there whatever they want (barring free speech limiting regulations).