Here's a slightly different take.

SMTP dates from the earliest days of the internet and you don't really see new decentralized/federated protocols after about 1995, which is when IM started to be developed. But that isn't by itself an answer, it just raises the question of why open protocol development mostly stopped in that era.

I think a big reason why was the advancement of networks and hardware made it feasible to actually build and run large internet connected datacenters for the first time. In turn that meant you could run a server farm to which everyone could connect to, without running massive modem banks and the like.

In the early days of the internet that wasn't the case. Servers were machines running in people's offices and the ecosystem was extremely fragmented. There were lots of different kinds of network and email system, SMTP was really a sort of hack to bridge different systems together. The internet was congealing, being patched together out of lots of existing stuff, and big companies mostly didn't care. Networks were often only intermittently connected, the internet was for hobbyists and researchers, not 'serious' companies like AOL or Microsoft, who didn't "get" the internet at all until some famous memo by Bill Gates (they were pushing their own closed network). SMTP reflects this world with its handling of offline servers, lowest-common-denominator simplicity etc.

Once big companies realized the internet mattered and datacenter / networking technology got far enough along, the era of decentralized federated infrastructure died out pretty quick. This is in many ways very sad, but it's also in some ways inevitable. The decentralized cooperative standards-based approach sounds romantic, but it can be described in other much less noble ways e.g. as a form of committee-controlled pure communism in which nobody owns anything.

Phrased that way it's maybe obvious why that model of development has failed: there's no incentive to do anything good. SMTP isn't good. It's like an MVP email protocol. XMPP isn't that good either in many ways; you certainly wouldn't design a protocol that way today. And of course the issue here is not just the protocol but the entire stack - the servers, and most especially the clients. Every federated protocol system always suffers badly from a fragmented and min-viable client landscape, which certainly held back XMPP a lot.

Who is incentivized to make something good? Well, people who have an ownership stake in the results. The prospect of a big payout is what lets you attract teams of the most skilled people who will work crazy hours to build a service people love. It's the capitalist model - wall off the garden and charge an entrance fee. Suddenly finding gardeners isn't a problem anymore, because you can just pay them instead of asking them to volunteer.

The lack of ownership causes all sorts of subtle problems in the federated protocol landscape, beyond the obvious ones like a proliferation of low quality clients written in people's spare time. Probably the worst is that there's little innovation. People become motivated to build a federated/open protocol mostly when they see a successful proprietary product and they'd like to have the benefits of that product without the loss of freedom, dependence on a single vendor, having to pay for it etc. These communities are always going where the puck was, not where it's going now. By the time they finish cloning one cool feature their proprietary competition has, it's too late, that competition already moved ahead and added something else. This really nailed XMPP because networks like MSN were constantly adding features that XMPP couldn't easily respond to, and you see it again with stuff like stickers in Telegram. No open source dev is going to spontaneously decide to add stickers if they haven't seen that feature before, because it'd require recruiting a ton of artists and would seem trivial. Proprietary software companies are much more likely to come up with popular stuff like that. They find it much easier to build multi-disciplinary teams.