Generating sexually explicit content can cause reputational damage or have legal risk. Not generating such content is something that many developers are looking for. There is people who may want such harmful content and other players can cover such a niche.
I don't think it's reputation risk of companies at large, but risk to individual developers. "He worked on porn" is such an easy gut logic for terminations. It's in our human instincts. Everyone know that in guts.
That's a bullshit excuse. The Chinese model creators live in a totalitarian dictatorship where porn is banned and the creators could be arbitrarily jailed, but even they don't go to such effort to censor their open source models (there's censorship on their hosting websites but minimal if you run the models locally).
Filtering is not necessarily a good user experience and comes with a cost to do. Google making a model they expect there to be demand for is not just an excuse.
They don't expect to make money serving Gemma; it benchmarks worse in almost every way than their closed-source Gemini. Believe it or not, one of the main sources of demand for these small, non-SOTA models is people using them for roleplay locally. Anyone corporate has the money to use a bigger, more effective model.