I'm not real sure that I buy that. Face ID according to a recent article here on Macrumors, only tries twice before giving that message. Seems like it would have been on the passcode screen before he tried Face ID if it was already failed. I guess we would have to test that with a Touch ID device and see what screens appear after failing and going back to sleep. I think the simple answer is it just failed to recognize his face, with the lighting and makeup not helping. The complicated answer would be either a major screwup putting the wrong phone there or espionage, someone getting paid to make sure the wrong phone was there or retrained to another face. Don't forget there are millions of dollars at stake with this one single demo going correctly, possibly even billions.
Also just another thought, if their story is correct, why did the backup phone not also fail? It was likely handled identically. This brings up more questions than it answers. Also if this is the case, if your phone is sitting on a table or if you have it in your hand locked, is it going to try to authenticate every face that walks by? Your server? The person behind you on the subway?