I am migrating my Python 2.7 App Engine to App Engine 3.7 runtime (standard environment).
I notice that Google's documentation suggests using a third party service like Redis Labs Cloud as an alternative for Memcache.
The Memcache service is not available in Python 3. If you need access to a hosted caching service, you can use a third party memcache service like Redis Labs Cloud.
Is there any reason why they wouldn't be recommending their own Cloud Memorystore for this?
From what I can see from other SO posts this and this, it sounds like it didn't work in the standard environment until recently. So this may just be a timing issue from when their original documentation was released until now.
As stated in this answer, at this moment, to make Cloud Memorystore work with App Engine standard 2nd gen runtimes, you'll need to use VPC connectors.
However, VPC connectors are still in beta.
Since products in beta have no SLAs and no technical support obligations, they are usually not recommended in a production environment.
I guess they'll wait until VPC connectors are GA to recommend Cloud Memorystore as a Memcache alternative.
Also, it could just be an oversight. You should probably provide feeback (top right on the doc page) mentioning this.