I wonder, though, if end-to-end encrypted iCloud would be a customer service nightmare for Apple, especially in the early days of iCloud. when Apple’s cloud apps were a bit wobbly, and devs were having a heck of a time using the iCloud libraries. People freak out when they can’t restore their files, and if they’ve somehow wiped the only key, those files are not useful on the cloud.
Also, not sure about the architecture. If you use the secure enclave to encrypt your iCloud files on one device, then you really can’t decrypt it on the other devices, so the question then is where are the encryption keys actually generated and stored. Obviously not unsolvable issues, but Apple still seems to be going through enough growing pains with iCloud as it is.
I can easily see that someone might have decided that it was too expensive and risky to do if the resulting product was going to have legal issues anyway.
