Experiencing the same issue which started intermittently for us Nov 2nd increased in the last week to 20 to 50% of the the time and now it is 100% percent of all create Teams via graph api failing to set to private.
I have tested using APIs beta and V1.0 and the same behaviour. Also , using the 'Create Team' action in Power Automate when set to private fails to set and creates as public (no doubt as it is using Graph API). Tested in 3 different tenants and the same results.
I second this looking into urgently - we are running an azure automation script every 15 minutes to find the public teams and set them to private to mitigate this currently.