Oreo is a trademark. Did they approve this? Do they not have a choice? I guess this is potentially good press, but if the OS has big problems they're not going to be happy when the "Oreo" name is associated with the problems by the press.
Google paid nothing, but has a "pure co-branding partnership" with the owner of the trademark, Mondelēz, according to this article.
Google did not pay the famous cookie's maker, Mondelēz, any money to use the name, said spokeswoman Valerie Moens, who in an email called it a "pure co-branding partnership." The company said in a news release, however, that it and Google will partner on a "variety of global initiatives designed to create innovative, playful experiences for both OREO and Android fans." These, Moens said, will include a drone flight that projects a holographic version of the Android and Oreo superhero, some Android and Oreo-branded cookie giveaways, and four short films featuring the new character.
So in this case, allowing Google to use the name "Oreo" is seen as beneficial to both organizations and will be used for inter-company marketing.
At least to the public's knowledge the Oreo twitter account the Oreo company reached out to Android first.
@sundarpichai L’Oreo, Monsieur Oreo, Nouveau Oreo…Oreo… we’ll always be l’ready, @Android . #Lollipop
I'm sure the co marketing is helpful on both sides but yes ace is right nobody paid anything.