Given a choice between a nice job at Google with a multi-million dollar salary doing the thing you love with the resources and infrastructure of Google behind you vs going it alone, the choice seems (no matter what the terms) like a poor one. It's not like Path have any really ground breaking technology. How defensible really is the idea?
That's a lot harder than you're making it sound. (Or maybe my sample is skewed.) I personally know one person who has walked away from millions and know of another half-dozen. "Phoning it in" for three years at a company you don't care about just to collect a big paycheck can be absolutely soul-crushing.
So, even though this offer and this decision both leave me a bit shocked, they already have the nice job and the resources they want. (office close to the bay, downtown San Francisco/SoMA is also nicer than the drive down to Mountain View)
It does matter a bit about the terms to, who knows, maybe Google wanted to roll it into their upcoming offering instead of having it as a standalone which would be a deal break for those heavily invested in their concept.