I think the answer becomes clear if you just ask yourself a simple question: was Google aware that having an ideologically diverse panel would spark some sort of protest among at least a healthy handful of their employees? I find it extremely difficult to imagine the answer to that question is no. So why would they cave to something they knew they would provoke? Ah.
Google is increasingly clearly driven primarily, if not exclusively, by money + influence. An increasingly large number of voices have been calling for something like an ethics panel. And this was an appeasement to them and to those that feel Google puts its self interest ahead of ethics. And this panel would have been nothing but a self inflicted thorn for Google. They're not going to tell them how to make more money or gain more influence. Instead they would be more like to proposed Google temper their actions or even outright avoid certain potentially very profitable endeavors. And this would have been coming from a relatively authoritative group operating from within Google itself, making it quite difficult to ignore. And by the time they started making these recommendations it would have been difficult to torpedo the panel since it would appear that they were being torpedoed for what they said (which would be true), and that'd be some horrifically bad press for an already beleaguered company.
Now Google gets to not only pull the plug, but to also claim that claim they've tried to form an independent ethics panel of experts before but 'unfortunately' their employees were opposed to it. And at Google since we deeply care about the voices and opinions of our employees, we've decided that instituting such a panel is clearly not a productive idea. And they can now reference this incident anytime outside forces propose instituting third party panels. On top of this all they also get to gain some goodwill back from their employees. Those 2,000 (who undoubtedly have been part of every single one of the recent walkouts/etc) are going to think they had a real and genuine impact.
But I'd expect they miscalculated two issues. The first is only having 2,000 people show up on the outrage wagon. "Caving" to that many people does look quite peculiar. And I think the bigger mistake they're making is in miscalculating what they just did to those 2,000. This isn't going to appease them - it's going to give them a sense of entitlement and empowerment leading them to even more actively and aggressively protest against future actions.