that's not AI-free search, that's blocking the ai mode from search.
If google signs a contract to deliver AI-free search, it means they have to deliver a search product that doesn't use ai to generate any of the search results they show, not just inside the ai-mode box but anywhere on the page. Which obviously is not a thing they want to guarantee.
In general, schools don't care if "AI is used to generate" search results. They care if a chatbot is shoved in front of students' faces every time they google something. The issue is the UI, not whether AI is used anywhere along the chain.