I have a hard time believing that Google sold Boston Dynamics because they didn't want to be associated with military applications or with "evil" AI. Boston Dynamics had deep relationships with the government and clear military applications when Google decided to acquire them. I don't see how the PR situation would have changed between now and then.

This seems like a case of a merger/acquisition that just didn't work out. Hopefully it's for the best. The military robots that BD makes have the potential to save a lot of lives and do good, in combat and non-combat situations. Ultimately, Google/Alphabet is an advertising company. Maybe it's better for Boston Dynamics to go their own way. They can still maintain a relationship with Google and other companies to share AI knowledge and technology.