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Google appears to either not screen ads at all or willingly allows misleading and lying ads and scams to reach its users. They profit off fraud by either lazyness and ignorance or malice, by letting "ads" like "Your PDF reader needs an update" through. And they don't act on them when they are reported.
It’s got to be willing ignorance at this point. Gemini Flash can easily distinguish these blatantly malicious ads from the title and redirect URL alone.

I imagine these malware ads offer very high CPCs, and I imagine Google always gets paid (ie no payment fraud). I wouldn’t be surprised if their associative payment fraud detection and banning system works orders of magnitudes better.

I reported a fake software update advert on YouTube. The report was declined. I appealed, and that was also rejected.

They couldn't see anything wrong with a maliciously fake software update advert.

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All 5 daily users of Bing search were immediately notified of the exploit.
If you know (or are related to) anyone who is likely to click on scam links like these, do them a favour and install an adblocker on their browser. Upgrade them to a better browser if necessary. Don't just tell them they should do this. Sit down at their computer and do it for them. Ads have become a safety risk and that's not going to change anytime soon.
Has Google (or other adtech) ever been sued for this?

They do barely any due diligence and are basically distributing malware and badware at a massive scale without any consequences.

They don't abuse Google Ads, scams are their casual use case.