I moved from the city to the Foothills of Denver and my VO2 max immediately fell precipitously as my runs went from mostly flat city streets to up and down steep trails, gaining a thousand feet of altitude over the course of a three mile loop. So I think you're theory is correct: they are not correcting for incline / decline when they measure VO2. Which they really should know.
Oh, is that why my VO2 max fell by a LOT (went from 36 at the end of fall - I'd fought so hard to get it to 37 during the summer, too! - to now 32-33 depending on the day). Obviously, walking uphill in a huge jacket with heavyish boots when it's -15 outside while slipping on the snow will slow a person down. I don't know when or why my app started measuring that when I'm just walking, tbh, but it's making me feel like this most recent wave of gym closures have really pulled my conditionning down (which it has, but maybe not THAT much).