The internet archive were probably counting on publishers goodwill to temporarily allowing relaxed lending rule. It’s not like they were distributing unlocked copies anyway (each copy expire in a few days IIRC thanks to DRM). Turns out the publishers don’t have any empathy even during pandemic and blow it out of proportion, as if the internet archive was turning into libgen and distributing unlocked pdf to everyone on the internet.

My own personal theory is the internet archive is not afraid of getting shut down and testing the water to see how far they can get away with poking the copyright law. They must have a contingency plan in case their non-profit organization got shut down to ensure its archive preservation in order to be this brazen.