Why did they make this payout and this contract? In other words—what benefit to Alphabet was it in exchange for?
Not damaging the reputation of the company is a common clause in severance agreements. I bet that not being retroactively found to have violated company policy is also common. Would it be in Google's interest to pay out the severance if the employee were found to have stolen corporate secrets?
I think that probably almost anyone is aware of the danger that a system like that, its just that everyone is deliberately ignoring it and weighing it against the PR storm. Its pretty much universal, to throw due process out the window is something that a vast majority of people want to do after any heinous crime committed, something politicians also always exploited.
How is talking about things that happened to you a violation of anybody's privacy?
It is prefectly reasonable to talk about true events that happened to you, especially in a interview, and to even use names.
The truth is the Truth, and your interactions with someone that you are interviewing should not be treated as private.