For those who don't wish to, in summary:
The problem is that they can't DMCA the downloader repo (as it doesn't contain any copyrighted content), but the downloader violates their service's TOS and specifically costs them licensing fees, as the rights holders extract payment for each download.
Their only recourse, in this instance, is to sue... But if they sue, they risk outsized impact on the life of the github author, something that it appears they have no desire to do.
But what do they do, stuck between the rock of "this guy is costing us money and effecting our business" and the hard place of "if we sue this guy he may end up a political prisoner in China"?
So they say that awful sounding line. The guy is an bumbling idiot when it comes to optics, clearly, with no understanding of how what he was saying was going to be read, but I don't think he's as villainous as the quote makes him out to be.