Despite all the bad that AMP did, we should not forget that it also did some good… I don’t know what happened internally at Google, Automattic, or between the 2 of them. What I do know however, is that AMP made me think.
One of the “restrictions” of AMP was the amount of CSS used, and a lack of support for JS in its initial versions. It made me think about the CSS and JS I was writing.
I always disliked AMP… If on a non-AMP site I applied the same restrictions that AMP had, the result was a far faster site. But the truth is that I became a better developer because of it.
Things like conditionally printing styles on-render for Gutenberg blocks were not ideas that came out of thin air… These things came to be because AMP was applying some tree-shaking, removing all styles for elements that were not on the page, and then inlining the resulting CSS, limiting it to a few kb.
AMP was not a good thing. But it did use some techniques that were brilliant. It pushed people to try and do more with CSS instead of JS. It pushed us all to write better frontend code.

A new performance team for WordPress core is being spearheaded by Yoast and Google-sponsored employees. The initial proposal is to improve core performance as measured by Google’s Core Web Vitals metrics.

As one of those developers, I can say that I don’t really care about the “Core Web Vitals”. What I care about, is reducing the carbon footprint of the web. Since WordPress accounts for 40%+ of the web, every single byte I can save on a page visit counts immeasurably. Improving performance is good because building a website that requires downloading 4MB of data on each page load is insane. Not everyone is as fortunate to have unlimited, fast internet… And we seem to have forgotten that.

is there a long game that serves Google’s interests being woven into this initiative? Would these employees even be aware of it if there were?

I can’t speak for Google employees… But as a Yoast employee, I am not aware of any plans or long-games. I was given the freedom to try and improve the performance of WP because my personal beliefs of improving access to the web and its sustainability aligned with my employer’s principles.
So far WP has democratized publishing… it’s about time we democratize content delivery as well.