The fact that the US allows companies to flat out steal your device during a repair process is insane.
The US doesn't allow it. Google won't keep your phone; they'll just refuse to service it. They had that line in their TOS for their own protection for weird scenarios, but they're not going to keep your phone. Why would they? It's broken and full of parts they can't use; they're not going to just let it occupy space in their warehouse, they'll send it back.
This whole thing is an absurd overreaction to a poorly-written line in a TOS that has never even been enforced.
LOL put the debate textbooks down and use your noggin. I'm asking you to back up your statements. In this case it would be fairly easy to prove a negative if you actually had any. If you don't have any evidence then don't say it.
More than likely the reason for this is because they are not sending the original device back.
They are probably pulling a used one that is in good shape from the shelf that is the same style, etc - shipping it to you as the replacement in order to save time and sending yours back to a repair center to be worked on if possible.
Came here to say this. Companies send refurbished devices out, they usually make it really clear that you should wipe your device and not expect to get data back exactly because once they receive the device and verify its condition within reason, they send a replacement. Nintendo, Apple, Pixel, Samsung have all done it to me.
Pixel is doing this because they can't send someone else a phone with a non-oem part. If they do in the US they take liability if it's a cheap Alibaba knockoff that does something stupid like make the battery explode. As screwed up as the US laws are, it's difficult to fault them for CYA.
Bottom line is, if the phone has a non-oem part they can't vouch for it, so they need to put your phone in the queue to get fixed is how it reads to me.