It reduces the value of their ads.

Let's say you are an ad buyer. Previously 1M clicks resulted in 1000 sales, now 2M clicks result in the same 1000 sales. If you previously paid $1000 for 1M clicks, you paid $1/sale. If they are now asking you to pay the same $1000 / M clicks you'd be paying $2/sale, so Google would have to drop to $500 / M clicks to offer the same value to advertisers.

But the same applies to ad sellers as well. Google would have to slash payouts to websites displaying ads by the same 50% / click or they'd be cutting into their margins. A competing ad platform without fraudulent clicks would be able to slide into this space, offering both a better value to ad buyers and a better payout to ad sellers, so they'd be taking market share from Google without having to do anything themselves.

Of course that assumes a market in which the value of ad clicks, views, and placements is clear to everyone and switching between ad platforms is trivial, which is not even remotely the case.

It might damage Google's reputation with advertisers in the long term. I'm not convinced Google would even care about it, given their other behavior.