Google generally doesn't have to worry about mutually-untrusted containers.

The meaning of "Linux containers are not secure" is that untrusted code should not be given root privileges within a container. Google is generally not doing that. They have e.g. trusted Gmail code running on the same machine as trusted YouTube code, handling untrusted emails and untrusted videos. But the Gmail team is not worried about the YouTube team hacking them, or vice versa. The security mechanisms just need to keep honest people honest.

And when they do have untrusted, third-party code to run, for Google Cloud Platform, they use VMs or actual sandboxes: see section 6.1 of the paper you linked.