"No", he said. "We'll sue them for every mile of fiber they lay down".
I can understand why they would make that play. It's kind of the only play they have. AT&T and Verizon innovate enough to remain...okay...but they're not exactly Google. The only way they would win is to get dirty and turn fiber laying into Google's very own Stalingrad. And between starting a new, massive, low-margin (by advertising's standards), and capital-intensive business, and keeping salaries high and employees happy, Google chose the latter and bowed out because honestly, dying on this hill isn't a smart move.
I doubt Google wants to do this. Pulling out at this stage, when Fiber hadn't actually provided the "nudge" to internet speeds and throughput that would make Google and Internet companies more powerful, would not place Google at a place of negotiating strength. It makes Google look bad and cements the ISP monopolies' notion that Google pulled out because they physically can't bear the pain and so they remain safe, not because Google chose to, can do this whenever they want, and have the ISPs at their mercy. It probably also burned a few bridges, if there were bridges at all, and makes weighing favors in a (hopefully not long-term) post-net-neutrality world swing towards the other major power players like Amazon or Facebook.