Google benefits too much from this sort of arrangement to have any incentive to stop it, even though these are unauthorized advertisements that are specifically against Google's AdWords TOS (side note, I wonder if there is a legal avenue to follow when a vendor doesn't follow their own TOS? An interesting thought...).
This is also a recurring issue with all of Google's advertising revenue -- malicious behavior such as fraudulent clicks, unauthorized ads, etc., are a decent portion of the revenue stream, and Google is financially incentivized to keep these sorts of abuse going until the ruse is up and the accuracy of their system is called into question publicly in a way that scares away advertisers, but with NDAs and corporate secrecy, it is far too easy to keep things unbalanced, and keep abuse like this in the dark.
Business models like this demonstrate just how dire the need for regulation is in some areas of the tech world, particularly among FANG.