Google adopted it because, as they more or less said in the announcement, it was already being adopted by the community and it hugely improved development experience.
This is a problem when you are looking at hiring new people etc . This fragmentation is going cause issues just because people are hedging against Oracle future decisions.
In a perfect world Google should have bought Sun and the current version of Java would look at lot like Kotlin.
Even if Kotline were 'better' (And I don't think it is), it'd have to be quite a jump better.
It's a little nicer for getting ideas down quickly, but beyond that to me it's just 'different' and now a whole other bag of things to support.
If I have to chose between Kotlin+Java or just Java I'll take just Java.
Going back to Java from Kotlin there's really nothing I miss.
I don't think it was money, so much as the established culture at Sun (i.e. James Gosling: "Sun is not so much a company but a debating society). A more aggressive CEO/leadership/culture would have maybe raised the money to take on Google, or to take another tact.
So while you are right - and thanks for the reference - the issue here is what Sun was about, vs. what Oracle is about.
Oracle will likely pursue the most aggressive strategy they can get away with Java.
I don't believe Sun was suing Google, but Oracle did.
The fact that Google is switching to Kotlin is mostly a means to absolve themselves of the 'Oracle risk' - it's a big change surely, a decision not taken lightly.
The future of Java under Oracle is hard to predict but there's legit concerns Oracle will make things hard.