Backing off of VPN, Relay and Monitor sounds like bad news. They are the Mozilla's only source of income if the Google search deal goes away. Mozilla's financial statements never detailed how much money they were spending on their different segments, so perhaps those projects weren't generating profit, and thus weren't worth keeping even though they brought in revenue. I can certainly see how it would be hard to compete with other business that are focused solely on that market, while Mozilla is trying to use it as a side-gig to fund Firefox.
But they were at least an attempt to create alternate revenue streams and seemed like useful products that were complementary to Firefox. I am very skeptical that Mozilla will be able to monetize any AI integration they include, assuming they even build anything worth using given how far removed AI is from their existing competencies.