Because they are shit at building online services and excellent at selling people overpriced devices.
Oh and FWIW. Apple also operates iAd, a locked down ad program targeted at their customers specifically.
Apple also could allow users to secure their cloud backups against anybody. But they decided they include mandatory key escrow by Apple itself. The mud puddle test proves that Apple and the NSA can access all your backup data.
How is that a business model "completely compatible with privacy"?
And the reason they do key escrow otherwise is simple: most people forget passwords.
And by the way, I find that downmodding that hit me appaling and a sign of unhealthy group-think.
I respect Tim Cook quite a bit for making this effort to argue for privacy and the rule of law, but that doesn't excuse the incredible damage his company has done over the last decade.