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I'm not even convinced they decided it was more profitable. The decision probably went something like this:

Manager: Our users want this feature

Developer: We can't add that because it will cause incompatibility with XMPP clients

Manager: This is the 50th feature that has been blocked by XMPP and hardly any of our users use it. Time to cut off support for it

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It's probably much simpler than that:

"It has come to my attention that clients which we do not control connect to our service. This severely limits the monetization opportunities available to us. Please fix before it is caught in a due diligence."

That and they probably threw hoards of cash and engineering at the problem.

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