If you or I can be held responsible for such activities from our homes, why give google an exemption?

It would depend on jurisdiction of course, many of us live places that will give us(with help of a lawyer...) a bit of an out for guest wifi or TOR exit nodes, but ultimately, you know google is going to settle for little more(or less) than it would have cost them to buy these works at retail, whereas you or I would also get slapped with thousands of dollars extra(per item?) in fines and legal fees.

They can afford to pay for the porn, but they chose to go the "we shouldn't have to because its smut" route, and not bother trying to say their employees are responsible for downloading random books/movies/whatever for personal use. Do they get to use this out for CP?

Also, unlike you or I, they have logging in place, such that they know which employees did what. Not saying they should name-and-shame, but they could(and should) easilly eat the cost and pass it through to those employees, whether it also comes with HR disciplinary action ornot.