I don’t think he was talking about search results. Rather other Google products like Drive. People used to share Hollywood films on Drive, for example.
If Drive was that permissive, then upload sites that tended to "look the other way", like Rapidshare, MegaUpload, etc, would never have existed.
It may have always been against their terms of service, but that didn’t stop it from happening in the beginning.
Source: first-hand experience
Edit: I checked dates. Google Drive started 2012. MegaUpload started 2005.