Just a guess :)
EDIT: It seems Vienna is on top since 2010, my bad. But position 2 is not so bad, and the other points still stand :) https://en.wikipedia.org/wiki/Mercer_Quality_of_Living_Surve...
But yeah, I know the city, and I agree with most of it.
Also, yeah, not part of the EU (but in practice it's more of a "pick what you want" thing with the EU
Of course, if you're just visiting... ouch :)
And that's US salaries (the website only offers a free preview.. yada yada).
I think Google generally thinks the cost of a talented enigineer is justified, and switching locations will of course represent a cost, but probably not such a big one in the great scheme of things.
When comparing cities I think it's best to use hard data and then compare them based on what's important to you personally. I usually use http://www.numbeo.com as a starting point for this.
http://www.numbeo.com/quality-of-life/city_result.jsp?countr...
(see that gauge? It's all the way to green!)
EDIT: and here is their ranking. It's only number 4... http://www.numbeo.com/quality-of-life/rankings.jsp
A good thing of Google betting on Switzerland might be some increased lobbying around that topic as it's all a bit of a mess currently.
Switzerland is historically infamous for having these qualities, it's why even the Nazis used them to deposit money. They also don't have things like DMCA laws. War aside, let's say the corporate lobby gets them to push the screws on DMCA to make it worse. Hello new Youtube HQ.
[1] http://www.building.co.uk/google%E2%80%99s-review-of-%C2%A36...