You're being downvoted, presumably because of the parallel discussion about the FBI. But I think this is most likely a combination of both:

1) The vast majority of Apple's users care more about getting their data back than they do E2E encryption. Encrypting backups does introduce failure modes that put more burden on the user (to have an emergency key, etc). Apple also cares deeply about things "just working", and so this is a space that was always going to be incredibly difficult to balance.

2) The FBI thing is also true. Given Apple's former plans for true E2E encryption somewhat gave way to what they have now, with little explanation, it's hard not to speculate that they backed away from the original initiative after some...involvement...from the feds.