Why did Waymo build small cars?

After seeing small Waymo cars at Silicon Valley's Computer History Museum, a visitor shared an explanation he attributed to the man who ran Google's R&D and funded the cars. According to that account, employees given full-size Lexus vehicles signed contracts threatening dismissal for taking their hands off the wheel and eyes off the road—but everyone broke the rule, from the CEO down. The visitor said lawyers' concerns about the unfinished AI led to the small cars being limited to 25 mph.