Google is a major machine intelligence company.

At least one of their existing products aims pretty directly at general-purpose intelligence.

They have a range of other intelligence-requiring applications: translate, search, goggles, street view, speech recognition.

They have expressed their AI ambitions plainly in the past:

We have some people at Google who are really trying to build artificial intelligence and do it on a large scale.

...however, "Google's AGI team" is interesting phrasing. It probably refers to Google Research.

Moshe Looks has worked for Google Research since 2007, goes to the AGI conferences - e.g. see here - and was once described as a SIAI "scientific advisor" on their blog - the most probable source of this tale, IMO.

Google Research certainly has some interesting publications in machine intelligence and machine learning.