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I would imagine the problems they might have with this project is that it, I assume, calls private remote Google APIs -- which would by definition be an unlicensed use.

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Nearly the entire point of the project is to have an Android system that isn't reliant on Google services.

Edit: I see I misunderstood. This page talks about opting in to Google services: https://github.com/microg/android_packages_apps_GmsCore/wiki

So they are using them.

What does breaking a terms of service mean legally though? Like they're spoofing the signatures so it all appears to google that it's the same, so I'm not sure how they'd enforce it?

They could use their safetynet to check

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