I think they've decided they don't want to get into bed with a bunch of whingers who can't be honourable partners to their present engine supplier.
It's one thing to want to get a better engine but it's quite another to be so publicly critical and ungrateful to a long term partner.
I reckon Merc can see any failure for Red Bull to win, or run at the same pace as the factory team, will result in RBR telling everyone who'll listen that they are getting a lesser spec engine.
Just like at Ferrari where the car cannot be blamed by the driver, Red Bull seem incapable of accepting that their chassis or operating systems can be at the least fault.
Who needs customers like that when you've got others happy to work well with you, the right decision from Daimler Chairman I reckon.
Ferrari and Old Bull were made for each other.