I don't think anyone is debating at this whether or not Google was in fact copying the genius lyrics, just whether or not that was in fact breach of contract or otherwise a violation of the law.
Changing fake apostrophes to real apostrophes after they found out their (in their mind legally acquired) data had them is just plain sensible, fake apostrophes break functionality like search for users (both ctrl-f and possibly more sophisticated search engines like google.com). They add edge cases to any software that wants to use them for text to speech or whatever. And so on. Literally the only use case fake apostrophes don't impact by at least adding an edge case is humans reading song lyrics that they have already found.
The issue is intent, did they remove the watermark as a matter of input sanitization, or did they remove it to conceal their behavior. Genius claims it was the latter.
Then Genius embedded a second watermarking scheme, and -- drumroll! -- Google's results only removed one of the two sets (the ones they knew about).