Why did Google decide to choose Mercurial? Based on what I read the main reason was that the mercurial dev team was willing to prioritize features needed for Google to add custom extensions to support its monorepo, and the git dev team wasn't going to reprioritize just for the sake of Google.
Yes, that's correct. Another reason was that Mercurial is easier to customize because it's written in Python so we could sometimes just replace whatever we needed without needing much changes from Mercurial itself.
Yet another reason is that the .git directory is considered a documented API and several other tools and libraries depend on it (e.g. JGit and libgit2). So any new features for Google would need to be made to those tools too if we wanted things built on them to work.
I can second that the aforementioned reasons are true. The funny difference is that Google employs the primary git maintainer. Git has a lot of customers though so it rightfully is very conservative with development.