This is the value of user.picture in my JWT after adding the custom claim: https://s.gravatar.com/avatar/c7db9afc482ae35a04dd7f31f78814b1?s=480&r=pg&d=https%3A%2F%2Fcdn.auth0.com%2Favatars%2Fma.png
Running that value through atob() gives me an error that says that the string is not correctly encoded. Fully encoding the user.picture value works because the string is correctly encoded for use with atob().
Ultimately, the user.picture value from Auth0 is incompatible out-of-the-box with atob() and you will have to encode it first.