They just demanded that she retract it. No opportunity to adjust it to include the additional information (there would be ample time to do this between review and the camera-ready).
In the article it says the co-author specifically requested the paper not be published because they "didn’t want such an early draft circulating online". Sounds like Timnit might have jumped the gun a bit and it wasn't just google that thought it wasn't ready.
They requested that it not be distributed online because it has not yet completed peer review, which usually comes with recommendations to improve the paper in either small or large ways. That is very different than retracting it from the conference review.
