What Google failed to realize is that people want chat that's connected to other services they frequently use. I'm already browsing FB so it's easy to chat with my FB friends using Messenger rather than both pop over to another service. The same reason why MSFT has tried (much less successfully) to incorporate its chat offerings into Office365 and the reason it bought Skype.

Google was in a position to capture the chat market by tying it to an email service that everyone was using - GMail. But it had two problems: 1. Email is an open service that doesn't lock users in meaning people using Yahoo Mail can still communicate with people using GMail (unlike Facebook where the only place to interact with FB users in is FB). 2. Google didn't lock its users in with GChat, so users could drift away to other services while still communicating with GChat users if need be.

Due to its very nature, FB was destined to win the messenger wars; if all your friends are already on FB then most people will default to what's easiest--the chat functionality that's already there and all your contacts are connected to. But since FB tends to be your personal circle rather than work circle, this left the work circle open, which Google could have captured if it hadn't screwed up on Hangouts leaving the door open for Slack.