IMO, it's because even if they do have the smartest engineers, the best engineering in the world can't fix a marketing problem. That's marketing not in the sense of ads and such, but in the sense of getting the right product into the right market at the right time. Just on the social network side, Facebook has a near-unbeatable network effect advantage, and Google+/Alphabet Social Network can never overcome that by making a better version of the same thing, no matter how awesome it is from a technical standpoint.
That's not to say that Facebook is invincible or anything - Facebook will go down some day, but it won't be because somebody else built a carbon-copy with a few more features and took their place.
That speaks to a lack of innovation though. Obviously Google shouldn't be trying to build a carbon copy—but they seem to be incapable of building anything besides that.
Plenty of startups have arisen to challenge Facebook (Instagram, Snapchat, WhatsApp). Why didn't Google build any of them? Especially when so many startups are founded by ex-Google engineers.
Or buy WhatsApp when they had the chance. That non-purchase is as perplexing an Yahoo's purchase of Tumblr.