I'm not entirely sure what you mean by #2, but I think you're number #1, combined with "universally the businesses that pay for keyword ads" is way, way, way, w

I'm not entirely sure what you mean by #2, but I think you're number #1, combined with "universally the businesses that pay for keyword ads" is way, way, way, way off-base. Of course shit and scams surface in search ads because Google doesn't do a good enough job of policing them, but they aren't completely ignoring the issue either. Ultimately, you're not buying ads to lose money and making high-intent keywords cost A LOT of money per click, so it's hard to play the game if you're not producing sales from it.