There is no extra chance of a short circuit before the power supply. After the power supply the power is limited, either by explicit current limiting or just because they are switching power supplies where transformer saturation limits the power.
So you could have a PCB fire, but PCBs are made to be flame retardant. You could have a wire insulation fire, but the amount of material would be so low that it wouldn't be able to start a fire anywhere else.
So I am basically saying there isn't really anything there that could sustain a fire and that there isn't a lot of energy to start ignition in the first place.
Fun fact: I had my desktop get unreliable for a few weeks until I finally thought it might be just dust build up in the case. Opened it up and found a huge scorch mark on the motherboard where a capacitor had clearly burned up.
Cardboard breaks down over time. It turns into particulate matter that goes airborne into really hot server intakes and comes out tiny little burning embers.
If it didn't burn down Google's stuff, it could have burned down other people's gear. I have decades of experience here; I'm not an ivory tower nerd. Any datacenter/colo provider worth a salt will jump on you immediately for having cardboard in your environment. DRT makes you unbox everything outside the various colos and won't even let cardboard enter.
The auto-ignition temp of paper is over 200C. The maximum junction temperature of most electronics is somewhere around 100C. This this literally could not of ever happened unless the equipment was already on fire.
I'll leave the idea that cardboard breaks down fast enough to be noticed over the life of a server to someone more knowledgeable. I note that there was no mention of cardboard in the article.
So you could have a PCB fire, but PCBs are made to be flame retardant. You could have a wire insulation fire, but the amount of material would be so low that it wouldn't be able to start a fire anywhere else.
So I am basically saying there isn't really anything there that could sustain a fire and that there isn't a lot of energy to start ignition in the first place.