It is an interesting talking point because it is exactly the same talking point that Square/Block have been using to promote their hardware wallet which has no seed phrases and shares custody of your back up with third parties.
For example, here is their business lead Lindsey Grossman using the 100 million figure, and then talking about her "friends and family":
https://youtu.be/WbjzZQwDozw?t=355Ledger is a business, a corporative company, right? And it's clear to see that this company wasn't founded by a crypto enthusiast but by a person who is a businessman and wants money. They go with option B.
Or, the incredibly simple solution which would have avoided literally all of this drama - create a new product called Ledger Nano R, which is the only product in their range which provides this Recovery nonsense. People who want third parties to store their seed phrase can buy the R, and everyone else with a shred of sense can stay away from it.