Google management has always been incompetent. It's just that now that economic conditions have forced them to make more drastic decisions that their incompetence is even more obvious.
Eric Schmidt seemed very competent, given how much of the famed old Google culture was built during his tenure. I was at Google during the Larry Page era and contrasting him with Schmidt was not favorable.
Yeah, I'd never heard of investors threatening to take their money back, either before or since. I've never had such a clause in any financing docs I've signed.