If someone searches for a specific product, you could still have competitor ads in a relatively fair way, but you have to put them after the correct link. Putting them first is going to mislead so many people.
And you could advertise related products, or unrelated products. So many options there.
Mandating Google choose the “one right” link is the failure point, here. (Not because I disagree.)
Similar problems with mandating that they track what’s considered a competitor.