The original report of "For many employees, it has become too difficult to take time off from their day jobs to work on independent projects." can be explained well like this: people who are below average productivity in their team can't spare the time to work on 20% projects.
I don't think this is a harsh thing; it's just a fact of life.
By the way, the Google version of stack ranking (if I recall correctly from my time there) is something like "If you're a manager, and there's a guy on the team who isn't being very productive, make sure he knows about the problem, so he can do something about it."
Also not a harsh thing.
Google doesn't want to become a Cisco, where all the good ideas come from buying up little companies. I suspect that people of above average productivity at Google still have plenty of freedom to try experiments 20% time.
What has changed a bit is that since the mantra of the company became "Features, not products", those 20% experiments are almost always going to involve adding features or other improvements to existing products, not wholly new products.
And that's ok, too. There is a whole lot of room to add features and make things better under the hood.