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Slightly off-topic rant:
I hate how the 'VPN' term has been took over by companies selling services using VPN technology.
VPN was initially 'Virtual Private Network' – used to securely connect own (as belonging to an organization or person) devices over a public network. Like securely connecting bank branches. Or allowing employee connect to a company network. And VPN are still used that way. They are secure and provide the privacy needed.
Now when people say 'VPN' they often mean a service where they use VPN software (initially designed for the use case mentioned above) to connect to the public interned via some third-party. This is not a 'private network' any more. It just changes who you need to trust with you network activity. And changes how others may see you (breaking other trust).
When you cannot trust your ISP and your local authorities those 'VPNs' can be useful. But I have more trust to my ISP I have a contract with and my country legal system than in some exotic company in some tax haven or other country that our consumer protections or GDPR obligations won't reach.
Back to the topic:
I do not believe that all VPN services are owned/funded by governments, but some may be. I don't have much reason to trust them, they are doing it for money and not necessarily only the money their customers pay them. In fact I trust my government more that some random very foreign company.
Agreed. What they're really selling is a proxy service, I don't know why that term isn't used. The fact that VPN software is used to establish that proxy isn't relevant, the end result is a proxy.
How is the term "proxy" more appropriate though? It's also the technical name for a concept that already exists. VPNs are by definition broader in scope than proxies, they work at a lower level of the networking stack and have different capabilities even if most people don't take full advantage of it. Anyway the point is that it's not a more appropriate term.
AFAIK the only thing VPN providers let you do, like SurfShark, ExpressVPN, NordVPN, ProtonVPN etc., is to route all of your outgoing traffic through their servers. They don't allow you e.g. to be in the the same fake LAN as a friend, which is what a VPN does.
Quote from Wikipedia:
That's pretty much what those commercial "VPN" providers offer.
That's not what a VPN does, that's what a VPN can do, if desired. What a VPN does is set up an encrypted tunnel between you and some remote network. That's it. How that remote network is laid out, how the traffic (and also what kind of traffic) is routed into/through/out of that network, and what the clients are allowed to do within are entirely up to the wishes of the network's owner. It might very well choose to isolate you from all the other clients on the network; that's not just a possibility, it's actually one of VPN's most important, most useful features.
Those commercial VPN providers offer you a fully encrypted tunnel that you can route all your network traffic through if you wish. It's just that people don't generally use it as anything more than just a proxy. Still, the connection is a textbook VPN connection, it's there, and it's capable of things a regular proxy is not, if you choose to make use of them.