Google (Alphabet) is a corporation. Corporations follow the profit motive. Furthermore it's a publicly traded corporation. These follow the interests of their shareholders.

What does killing dodgy ads do for Google's bottom line? It's removing paying customers and driving down competition for (and therefore value of) ad space. What's the cost of dodgy ads to Google? The sites that use Google Ads will continue using Google Ads if they do nothing about the dodgy ads. The sites that don't use Google Ads won't be swayed to use Google Ads if they do remove the dodgy ads. Google is not held liable for serving dodgy ads so there's no direct risk associated with serving them.

Why should Google remove the dodgy ads? "Don't be evil"? That motto exceeded its shelf life before it was first publicly posted.

Hanlon's razor is nice and all but there's a difference between malice and amoral apathy. Corporations would sell shredded orphans as fuel if it made economical sense to do so.