Earlier quoted context omitted.
That is the conflict of interest. It's hard to see how this isn't going to strengthen their position in the ad serving market. Google being able to define where the bar for "badly behaving" is set means that only their competitors will be hurt by this.
I wonder if the motivation isn't a bit more subtle than that. My guess would be they're hoping to improve ads across the web so that people turn off ad blockers in general.
And what would be one reasonable response that a company reliant on ads for income who also happens to produce a browser used by a huge number of users look like when they realize this existential threat exists? Well, one reasonable response would be exactly this, a "kill the misbehaving ones" addition to that browser in hopes of heading off the threat before it becomes a true, company killing, result.
Only time will tell if this change in mindset on their part actually results in heading off the eventual outcome.