>> They currently are behind development of the most popular (And open source!) mobile OS out there,
And they are quietly dragging all the open source parts into closed source framework called Google Services, trying to create a vendor lock-in for the apps, so that it's impossible to run software on AOSP without Google Services Framework, which is closed source and completely controled by google. Messaging app is gone (hangouts to the rescue), so is Gallery (hello Google+ Photos, yuck) and a lot of other, smaller things are all being sucked into closed source with their open source variants being left behind and abandoned.
>> the most popular (and "mostly" open source) desktop browser out there
_mostly_ open source. Do you even listen to yourself? Chrome has a fair share of closed source code with important functionality. Chromium is impaired compared to Chrome in terms of functionality.
>> having given very solid reasons for why they dont do security theatre with their Chrome password store
You mean encrypting user passwords with user key and allowing to self-host open source synchronization servers, like firefox does is "theater" ?
>> Im not clear in what sense you could consider them to be "rotting".
In the sense that google stopped being on the forefront of open web and started trying to become the web. Because it's easier to earn money this way. And in the short run, you might even score a nice bonus. As for the long run - who cares for the long run, when there is a nice cash bonus?