And let's also take a moment of silence for everyone who invested time and energy into creating stories only for Google to just not be bothered anymore and switch it off.
I have the unfortunate inkling that this is here to stay. In hindsight it seems obvious that Google Search will implement the most successful and ubiquitous features of social media. I don't like it, but the pressure this will create for companies to compete in this space will be huge.
If stories posted here on HN are to be believed, and I overall do believe them, then they are probably mostly still at google, they are just onto a new project. Google seems to prioritize and reward project completion (aka "shipping") more than long-term project successfulness. Also it's more advantageous to do whatever it takes to get a leg up and get promoted than it is to care about the long-term viability of a project.
So to answer your question, probably still at google, just not associated with the "stories" team anymore. It's a game of hot potato where you don't want to be stuck on a team not shipping/innovating since those are the same teams that get spun down (though to be fair it sounds like they just get absorbed onto the "google blob" instead of being let go most of the time).
It's sad that people that are the most passionate are the ones who suffer the most (suffer in terms of not getting funds/time/etc to expand a product they care deeply for and for their troubles get shifted to some other team when Google loses interest in their "baby").
This definitely rings true in my experience, but I have to wonder what a better system would be for Google. Their leadership just isn't top down which means rewards have to hit some kind of decentralised target, launches being the most impactful.