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I don't see anything wrong with the quote? Other than the policy itself being a ridiculous change, the wording is pretty standard legal speak. Not sure why you're jumping to "ChatGPT Lawyer"
You may not X in a way that X
Definitely reads weird to me. It should suffice to say "you may not X".
You may not X in a way that Y
implies thatYou may X in a way that does not Y
, and is more specific (and changes the meaning of the license) vsYou may not X
The legal distinction in this case allows for distributing the software for example as source code, but not as a service.