This forced firms to then hire third party vendors who in turn 1099ed the "workers" to work at company X, including google.
Should we force every company to be vertically integrated and directly employ everyone who works at one of their facilities? It's just a ridiculous complaint.
Now, if they took the entire recruiting work for that team and gave it to the outsourcing agency who did the job from their Florida office, it wouldn't be a problem. They could also do what Apple does and host all the contractors in a separate building with no contact with Apple employees https://www.bloomberg.com/news/features/2019-02-11/apple-bla... but the optics of that isn't great either.
By having large numbers of contractors, Google could have their egalitarian, idyllic workplace, but have a non-egalitarian 2 tier system, with distinctly 2nd class workers.
The reality is that people don't operate in a purely communal/egalitarian fashion. Nor are people purely hierarchical. There is always some degree of hierarchy, and some degree of communal existence. The larger the group, the more hierarchy is necessary. However, even in the sort of magical feeling hippie-dippy gathering of artists, there are still community leaders. There is still some kind of functioning hierarchy, or things just don't get done. (I have some personal experience in this area.)
I think the problems in such systems come about when people are in denial about their hierarchy, their meritocracy, and the consequences of not fitting in. If people have to pretend their hierarchy doesn't exist, and everything's just running on love and understanding, then people who violate the rules and norms still need to be punished. Often the hierarchy remains disguised by characterizing violators as fundamentally bad or selfish people. By abandoning consciousness of one's rules and hierarchy, one risks nonsensical, outsized, or downright unjust consequences being meted out by the group. Basically, it's a recipe for groupthink to take over and the abandonment of principles.
There is already a general discussion around employees vs. contractors in the American economy. Showing a large, profitable technology company doing the same bolsters the case that this is a systemic problem.
Also, the article mentions that “high-tech companies have long promoted the idea that they are egalitarian, idyllic workplaces. And Google, perhaps more than any other, has represented that image, with a reputation for enviable salaries and benefits and lavish perks.“