The chat history settings for Hangouts Chat and classic Hangouts have been combined in the Google Admin console. There's now one settings page to control chat history for your organization.
If you turned on both Hangouts Chat and classic Hangouts in an organizational unit, the classic Hangouts history settings you chose apply to all direct messages, regardless of the service participants use. For example, if an organizational unit had History is On for classic Hangouts and History is Off for Hangouts Chat, History is On for all users in the organizational unit.
The settings on the chat history page apply to both Hangouts Chat and classic Hangouts, regardless of which service you turn on or off.
If chat participants are in different organizational units, and you require different history settings for each, the chat conversation can’t be created. Chat conversations respect the settings for each organizational unit.