https://fairuse.stanford.edu/overview/fair-use/what-is-fair-...
There are complications, but google can use thumbnails because essentailly they are used to "review" the website.
Has google sampled and hosted the whole image on their own website and made more iamges in the style of say mickey mouse, they would have been taken to town by the owners.
This is why there are no commercial movies on youtube (without an explicit agreement) and why DCMA takedowns exist.
One only needs to read the Supreme Court decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith. In this case, it was found to not be fair use, but with a forceful dissent from Elena Kagan. And this is just a straight-up use of a photograph / art-piece. Add technology to the mix and things get really messy quickly.
"Years later, Goldsmith granted a limited license to Vanity Fair for use of one of her Prince photos as an “artist reference for an illustration.” The terms of the license included that the use would be for “one time” only. Vanity Fair hired Warhol to create the illustration, and Warhol used Goldsmith’s photo to create a purple silkscreen portrait of Prince, which appeared with an article about Prince in Vanity Fair’s November 1984 issue. "