Registrars in general have many failure modes. Customer service nightmares (stakes being high if you lose an important domain, either through error or social engineering), malicious behavior (NetworkSolutions sniffing searches to buy domains[1], WhoIs privacy shell companies used to steal domain ownership, Unregistry increasing some of their new gTLDs by 500+%[2]), stability problems are all non-rare occurances.
It's hard to trust a new registrar when it's so easy to fuck over customers
Sure; but, we're talking about Squarespace specifically. Why are they problematic? And, how are they problematic for someone that decided Google was a trustworthy company to register their domains with, knowing their history to kill all of their products?
Sorry, my answer was for why transferring to _any_ registrar is a problem. It involves a lot of trust built up over time. I don't know SquareSpace's business dealings, but I'm sure many others who were on Google Domains don't too, and will need to build the same trust.
Google Domains has been around longer than their more recent reputation of frequently killing things. It also felt "complete". It worked (just maintain it) and people liked it, why kill it? It felt stable. But apparently everyone misjudged.
But that's also why I personally am no longer on Gmail, Google Drive, Google itself, etc. I have found replacements.
It's hard to trust a new registrar when it's so easy to fuck over customers
[1]: They're mentioned in this article https://en.m.wikipedia.org/wiki/Domain_name_front_running
[2]: Can't find the article anymore, it was like, 2015.