In Google's case, are they even liable?
Possibly, a judge will decide. Other stores are liable for the products they sell you, so why not Google?
Also Google is an easy target, since they're big and have money. Suing thousands of poor app developers is a bad strategy.
Other stores are liable, but it's not really possible to draw a parallel between a bottle of shampoo and an app. There's just so much more involved in checking if an app is sending or collecting some kind of data on users. I recall around a year ago or so, one of the most popular android file managers was found to be sending user data off to China. Google didn't find it, nobody found it until a security researcher started looking at it.
Blaming Google is like blaming your ISP for getting a virus on a shady porn site.
It is google's responsibility to make sure that the content they host does not violate law. If they do not take down illegal content, they are saying "Hey, it's cool" when the terms of use explicitly say otherwise.
Going to play devil's advocate here. In Google's case, are they even liable? The apps are hosted on their store, but they don't create them. Surely if app developers are creating apps targeted towards children, and knowingly using the data they collect, they are the responsible party?
Setting a precedent where Google is responsible for every downloadable item on what is essentially a curation service seems batshit to me. Not only is it bad for Google, it means that no other party can realistically curate apps for Android, as they won't have the resources to spend a bunch of time looking at every app on their store.