How should the car have responded to the cyclist? In ambiguous stops like this I find non-verbal social cues like nods, facial expressions, and hand waves are the only way to break the impasse.
https://en.wikipedia.org/wiki/Carrier_sense_multiple_access_...
Sounds a bit like what the car was already doing, just that a track stand creates a few false positives.
Now try driving in dense NYC traffic, and you'll see humans communicating everywhere. Good luck to self driving cars in that scenario - unless humans are 100% off the roads.