The fundamental difference between activism and research is that activism sets the agenda ahead of time while research explores the knowledge space and reports findings. One helps us incrementally make better sense of the world, the other wants us to narrow on particular facts while omitting other relevant facts in the name of advancing a cause.
> Reasons for not citing research, especially recent research, range from lack of relevance ... To simply not having known about it
The omitted research is clearly relevant. Deciding what is relevant and what is not is precisely what narrative warfare is. If they did not know about the adjacent research, then they would simply be incompetent researchers (which I highly doubt is the case).
> The correct reviewer response to this would be an "accept with corrections" to "revise and resubmit"; retraction is overboard.
There is no retraction because there was no external publication. Jeff Dean states reviewer response as you stated was there but was ignored by the approver.
> Once your employer starts interfering with what you can and can't publish, it's time to find a new affiliation indeed.
Corporate researchers are still employees and are bound by a job description. Independent of the content of the research, it is also entirely within the rights of the employer to set a certain bar of quality being cleared. In this case it seems like Google didn't want affiliation with this paper, not the other way around.