I don't mean to be rude but yeah, this is exactly what AGPL was intended to combat. It's a lesson learned for these developers, and Google did nothing wrong or even unethical imo.

A lot of people treat licensing emotionally (e.g. WTFPL, or picking licenses that feel good, or that we saw in another project), however business people are very logical and will unfortunately exploit this.

The irony is that Google probably would not have done this if the codebase just omitted a license entirely. When I worked there, they wouldn't allow OSS with no license.