Earlier quoted context omitted.
Not disagreeing with what Thiel is saying here, but it's pretty hypocritical for him to be criticizing here considering he's the co-founder of Palantir, a company that feeds some tasty tasty morsels to the surveillance state and military-industrial complex.
It seems he's drawing a distinction at domestic vs. foreign actors. The criticism at Google here is against working to enable the US military vs. what is a thin veil of enabling the Chinese military hiding behind a veil.
It’s Google leadership capitulating to the (imo naive) politics of its workforce to not work with the USG, while continuing to support the governments of adversaries (because largely American politics ignores the plight of people in places like KSA and China under a weak kind of moral relativism).