Earlier quoted context omitted.
The same way as PiHole does. It's not hard to block Google adds on 3rd party sites with a DNS or IP-level block.
If ISPs actually tried to do this en-masse, Google would move all ad serving to google.com
This would solve Google's immediate problem, but it's such a huge escalation that I expect lots of unintended effects not to Google's benefit. There is a reason they haven't done this, despite widespread adblocking use.