The interesting thing - from what I hear from people working at Google Zürich - is less than 10% of those working there are Swiss.
The location seems to be more about having a place to attract bright minds from Eastern Europe and even Israel that's still close enough so they can fly home easily for a weekend. So quota restrictions probably would really hurt here.
With respect to the office being located there in the first place, the story I heard was that it was basically a combination of Urs and ETH. The office was never intended to be huge, but it was successful in attracting candidates at a much higher rate than other European offices and thus quickly became the largest, making it the de-facto European engineering HQ. And yes this was very expensive for the company indeed, but luckily Google prints money so it wasn't a big issue. Other less fortunate companies would have had to impose hiring caps or quotas I think, to avoid Swiss salaries becoming dominant.
I don't think unlimited or limited EU immigration has made a huge difference. It's always been true that most employees in the Swiss office are not Swiss. When I joined Switzerland required visas for EU citizens as well, I had to prove I had a job and a degree to get in, and the Swiss office is full of Americans, Russians, etc. Local kantonal control is very strong in Switzerland and Kanton Zürich very much likes having a local employer with bottomless hiring needs and a bottomless bank to pay them with. I guess Google Zürich is closing in on employing 1% of the cities population, so they can usually get the visas they need.