Target trusted their HVAC management firm so much that they had full unsegmented access to the LAN in each store. The credit card swipe terminals in the same LAN were totally compromised and millions of users had their credit card credentials stolen.
Defense contractors and places that store / manage large amounts of money are totally within their mandates to trust no one, not even many of their own employees.
Someone hacked their HVAC firm to hack target credit swipe terminals.
At the time it was the biggest hack in US history.
I think we are mostly in agreement.
They know it's a bad design but doesn't matter because the threat is too improbable. Until it isn't :p
That's why you use different hardware vendors for your routers and servers, another vendor for your network connectivity, and yet other vendors for your software. This way, MiTM is mitigated by TLS (or equivalent) and server compromise is mitigated by a good firewall and network inspection stack. Placing all your eggs in a single Google basket is giving a lot of power to a single "don't be evil" corporation, who may get hacked or compelled by law enforcement to spy on you and your clients.