Its just about same anything. Simple guilt-by-association is a real thing for google at least. You have an employee who's deemed by google as a bad app developer? That can impact the business that employs them even if its an unrelated app.
If I remember correctly GitHub also locked an entire organization’s repos because someone accessed GitHub from a red-flagged country probably 2 years ago.
I can’t wait for regulation to arrive and stop this kind of behavior.
That's a very different thing, because they were worried about breach of US law. Not saying that makes it fair or non-destructive to the business, but it's not in the same league as Google being over-aggressive in protecting their ad money.
(And if there were regulations around this, Github would probably still have done the same thing, because "national security" regulations punch through "consumer protection" regulations every time.)