What meeting can they possibly have had where the options were "Just reprimand him in private" or "Ban him, get into the news cycle and face weeks of public backlash" and they landed on the latter?
It's hard to imagine the decision wasn't almost completely fuelled by Tencent's part ownership of Blizzard and Blizzard's stated goal to expand their marketshare in China. If so, it devolved from a company increasingly known for just poor decisions and communication (mobile Diablo announcement anyone?) to a company that publicly and blatantly prioritises shareholder interests over ethics.
And let's be frank; there's not that much anyone can do about it. People can claim they're uninstalling Blizzard games. And I'm sure some do. But the next time they release an objectively good game everyone's back in.