I don't know much about the C# license, but to me suggesting Google would use C# seemed very strange, and probably very foolish on Google's part if they were ever to do that, but a lot of people thought that would be a good idea at the time.
Either way, I think this is just another vector of attack from Microsoft towards Google to hurt them, along with stuff like #droidrage, scroogle, the push for the Google search anti-trust, and now the push for the Android anti-trust in EU, too. They just want to hurt Google, badly. It doesn't really matter how they'll do it. They'll simply explore and take advantage of all opportunities to do that. It's actually a very similar strategy they've used in the past like a decade or more ago. Microsoft hasn't changed.