Android shouldn't be considered Open Source anymore, since source code is published in batches and only part of the system is open, with more and more apps going behind the Google ecosystem itself.
Maybe it's time for a third large phone OS, whether it comes from China getting fed up with the US and Google's shenanigans (Huawei has HarmonyOS but it's not open) or some "GNU/Linux" touch version that has a serious ecosystem. Especially when more and more apps and services are "mobile-first" or "mobile-only" like banking.
Allowing apps to say "we only run on Google's officially certified unmodified Android devices" and tightly restricting which devices are certified is the part that makes changes like this deeply problematic. Without that, non-Google Android versions are on a fair playing field; if you don't like their rules, you can install Graphene or other alternatives with no downside. With Play Integrity & attestation though you're always living with the risk of being cut off from some essential app (like your bank) that suddenly becomes "Google-Android-Only".
If Play Integrity went away, I'd be much more OK with Google adding restrictions like this - opt in if you like, use alternatives if you don't, and let's see what the market actually wants.
Play Integrity is not compliant with any antitrust legislation, that's painfully obvious. The sole and only purpose of this system is to remove non-Google Android forks.
The benefits may not be sufficient to offset the harms you see, but if you don’t understand how and why these capabilities are used by services, I’m also suspicious you understand the harms accurately.
Betting on Play Integrity to solve that is betting that devices will become more expensive in the future, that's quite obvious that the opposite is happening, they are getting cheaper and cheaper.