I would be quite surprised if the real product direction power wasn't held by the principal engineers at Google. I mean, ya, the managers get to manage, and they provide some leadership, but they have those pesky management tasks and politics (all necessary) getting in the way of that. In that situation, there are also probably plenty of managers who have to manage peers (i.e. people who have equal or even more influence in the company), and the concept of "underling who reports back" is a bit of a stretch!
The individual contributor path is exponentially more difficult to climb. I argue that you both have to win the lottery with the right projects and get in early at a company, and have all of the necessary skills.
I believe it is a story that is told to individual contributors by people with real power to keep them motivated.
The only theory that I've heard of where a flat org could be actually beneficial to individual contributors is the parents theory on open allocation. Otherwise it's just management kicking out the ladder once they've climbed it.