There is storage, it's just that what's stored is encrypted with a key that only the clients possess. A court could very well order the party involved to turn over the encryption keys.
And before someone pops in with "but what if they deleted the key?" - well, then for all intents and purposes, they've also deleted the document, in violation of the legal hold.
This is about Google Chat (in Google Workspace) which doesn't have E2E.