Is it possible that Google liked your product and subsequently thought you might be a good hire, but didn't like your product as a potential acquisition? That is where I think the difference lies. Were you contacted as "I'm from Google and we are interested in you", or "I'm from Google and we are interested in your product"? That is a big difference. The fact that you specifically mention "Their recruiters" would lead me to believe it was the former, but if they mention your product (beyond some acknowledgment of it) that might fall into a gray area.
Thousands of people abandon small side projects and independent businesses every year to join companies as an employee. Just because a company is recruiting someone who happens to have some product doesn't necessarily mean that the hiring company has interest in both the person and the product.