I think it might have been canned due to revenue implications more than employee revolt. Google doesn't want to end up in a situation where dragonfly doesn't earn much money, causes constant headache from the Chinese government, and gives ammunition to both left and right wing politicians to use it as an argument against Google on everything.

I think enough money can buy silence from a lot of people, plus it's clear google already has the tech, as they show a banner on every thing relating to covid (search results, YouTube) and do a quite impressive job at that. So I guess they can just tweak it for dragonfly, or even get their Chinese employees to do the tweak, since they already hire in China.

Once the growth slows, companies look for alternative revenue sources, like Apple is doing with services. The problem is that google has shown itself to be wildly incompetent at non engineering parts of their businesses other than search. e.g, Google cloud might be the only cloud to raise prices for anything so far(Google Kubernetes Engine price update)

It will be interesting to see what they choose. I don't think dragonfly can make them much money anyways, since Baidu too isn't making a lot of money in China.(When compared to how much Google makes in the US). I guess mostly due to closed mini app ecosystem on wechat, and probably a smaller internet eco system outside wechat.