Android OS itself is an open source OS for which Huawei is also a contributor. What Google is referencing to is GMS (Google Mobile Service, including Chrome, Gmail, Google Map, Youtube, Play Store, Hang-out, etc.). GMS is a free download outside of China.
IMO, it is just a matter of adding extra steps when you set up your new phone:
Do you want to download GMS? Yea, No
GMS download complete. Do you want to install GMS? Yes, No
GMS installation complete.
Sure, in the long run, Huawei has to build its own ecosystem. Agree.