1) A proper, popular search engine is incredibly expensive to run. You can't do it for free. It's going to have to be ad-supported. But ads are the very opposite of Apple's brand.
2) And financially, they'd trade their incredibly lucrative deal with Google for such a high risk? It just doesn't seem like something a board would approve.
3) The timing of this feels very suspicious, though maybe that's just sudden journalist interest rather than leaks... but if you were Google, this is the best thing that could happen to you lawsuit-wise. Can't you imagine a conversation one or two years ago? "Hey Apple, OK we'll pay you the $8-12 billion, but you also have to spend a little chunk of it -- just $10 million, really -- to credibly claim you're 'developing' your own search engine. Don't ever deliver it, just always be 'working' on it. Cool? Awesome, thanks."