Larry Page spelled it out in his Google I/O q&a. Google tried for years and years to get interoperability but Facebook, Microsoft, and Yahoo would never do anything more than 1-way interop sucking users out of xmpp into their proprietary system. Gchat didn't have many active users, meanwhile the closed systems were getting hundreds of millions of daily actives.

I think mobile chat taught Google a lesson: the cultural Dna that "open always wins" pretty much leads to losing and having to play catch up.

I think at this point the biggest hope is that something like telegram can become the defacto new xmpp.