One more time
When Google – a company whose entire business model is based on surveillance – tell you that your app is too privacy-invasive, it is. Given that bluetooth contact-tracking have positive value (they are not a solution but they almost certainly lower risk, see my other comment), and given that their benefit goes up rapidly as a function of the proportion of people who use them, then the lowered proportion of people who will use this thing will kill people. The people who are pushing this thing will cause people to die because of what they are doing. And we can assume they know this, but they are either too stupid and incompetent to understand the implications of their actions or they just don't care. In either case they should not be doing the jobs they are doing: I would like smart people who do care, please.
Biting the hand that feeds IT
