Because customers aren't satisfied with pretty decent when it comes to speech to text, if it isn't state of the art there's someone just around the corner doing it better....
Most local voice processing solutions seemed to stop dead in their tracks, developmentally, when companies figured out we could make this a cloud service, but I don't know if I really believe it's technically unfeasible the other way.
The bottleneck is simply raw gpu compute power available.
I completely agree with you that the technical gap might be caused in part by incentives from cloud companies. Why invest in researching something that makes your core business less valuable?