The question is not whether Google knows how to do proper end-to-end-encryption, the question is whether they want to do it. They have a clear incentive to not do it properly, which is being able to sift through your data to sell it to advertisers.
Would be an interesting test to start chatting on an well established account (a few years old) about something you have never talked about before and see if you get relevant ads.
I did that some years ago on hangouts and it was almost real time. My buddy was on a machine without ad blocker and as soon as we started talking (as an experiment) about cars and mentioning a certain brand a few times, he received ads for that brand moments later.
