If it was already released as Apache and everyone contributed under that license, contributors outside of Google have no need to sign a Google CLA. Everyone can continue using it outside of Google without issue.
I don't know why this is needed, but glancing at the CLA the clause which is most obviously not covered by the Apache license is this one:
"You represent that you are legally entitled to grant the above license. If your employer(s) has rights to intellectual property that you create that includes your Contributions, you represent that you have received permission to make Contributions on behalf of that employer, that your employer has waived such rights for your Contributions to Google, or that your employer has executed a separate Corporate CLA with Google."
Linux requires a similar declaration to accept code, but many free software projects do not, and it's not a part of any of the usual licenses.
If not, Google can't claim to own the whole project, but they can claim they own bits of it and refuse to allow distribution of those bits, just as they could if someone had release core parts of the Google search algorithms without permission. In that case, the choices for the project are to either create a clean fork without any of the Google contributions, or cease distribution altogether. It also leaves downstream users in a somewhat awkward legal position. I certainly wouldn't want to depend on the project for something that directly competes with a Google service, for instance.
Still, more likely it's just a mistake by Google legal and furthermore, it's highly unlikely they would go around suing people, especially when it's not 100% clear that the IP was released without permission. Still a bit of a messy situation though.
I've seen quite a bit of "open source" projects being pull off when the employer discovered them, and while it's true that you can't effectively pull anything off the internet, it also means that no one with a shred of common sense would ever touch them again with a 10 feet pole.
This is slightly more complicated since it's been released by the corporation under an OSS license. It's also less about employees doing something on their own, and more about the company fearing that some one external will lay claims to parts of the cod from what i understand. But there can be still internal legal complications that would result in this being pulled off completely or dropped.