That's what I thought while reading the post. Microsoft was infamous for internal divisions basically acting as separate companies, with divergent roadmaps, duplicated features and so on.

In this case, however, given the prominence that was originally placed on the acquisition (at a time when Google had no direct presence in home automation), I suspect that the original vision was to actually merge the two worlds. The Google rank&file probably learnt very quickly how toxic Fadell was, and then proceeded to keep Nest at arms' length and do their own thing, basically writing off the acquisition and hoping it will eventually go away.