I'm not familiar with the instance you're referring to, but at face value I don't understand the problem. It doesn't matter if it's a pedestrian or a cyclist—in both cases, the car should avoid crashing into them.
Don't assume that self-driving software is designed with even a minimal level of competence.
Footnote: there have been many articles about this incident posted to HN. Here's one: https://news.ycombinator.com/item?id=19333239