Maybe because they underestimated people's ignorance.
I think they saw (and still do see) it as a better, more privacy preserving technique than what everyone else is doing.
Their hubris is in not seeing or thinking that they will be able to stand up to all kinds of abuses of this system that its mere existence will invite; their hubris is also in thinking that they will be able to perfectly and without mistakes manage and overview a system making accusations so heinous that even the mere act of accusing destroy people's lives and livelihoods.
Since the announcement, I can think of a dozen ways Apple could be easily forced into scanning all the contents of your device by assembling features they’ve already shipped. Yet they haven’t. At some point, people need to produce evidence that Apple cannot hold the line they’ve said they will.
What we have now is Apple, with its "strong privacy" record, normalizing this. If it succeeds, it would be that much easier for the governments to tackle other stuff onto it. Or, say, lower the threshold needed to submit images for review. I can easily picture some senator ranting about how unacceptable it is that somebody with only 20 CSAM photos won't be flagged, and won't somebody please think of the children?
And yes, if it comes to that, Apple definitely cannot hold the line. After all, they already didn't hold it on encrypted cloud storage - and that wasn't even legally forced on them, merely "not recommended".