Google Password Manager does in fact have E2EE. It's quite straightforward to enable. Your interlocutor is complaining that it's not the default, which I'm quite sure is a deliberate decision made on the grounds that the typical user, the one for whom the default matters because they won't tweak their settings, needs workable account recovery more than they need defense against the specific kinds of security threats that make E2EE relevant.

LastPass, designed for regular users and one of the most popular password managers, had a breach of user vaults. If they hadn't implemented E2EE then it would have been more devastating than it was (crypto wallets were found from vaults with weak master passwords).