> If I were more conspiracy-minded, I'd think they let Otto happen in order to feed a poison pill to Uber...

That would be a very bad strategy if true so I highly doubt it. IANAL, but I believe under estoppel Google's knowledge of Levandowski's activity and implicit permission to continue would forfeit Google's right to sue later. Likely as soon as they came to know about it they took immediate action to prevent him from taking this defense.