This works very well for tech enthusiasts and people who self-host nextcloud at home.

The issue is when you are a government or university, it becomes harder to get all your users (which are probably not all tech savvy) to install a third party app store deal with the Android warnings about installing from third-parties, etc etc.

And this is probably the user base Google are targeting with this move (assuming it's malicious) . When the higher ups complain that their files are not syncing and need to install things with a special procedure they sometimes wonder why they are not using M365 or Google which seems hassle free.