What's the downside of turning this on? From the article it just seems like it would mean more capabilities, more consumer choice. Is the only "downside" that it allows you to bypass cell networks when getting content?
Plus, Google or another company has to pay an engineer to write an app for it, and test it against the hardware in the phones, etc. etc.
Usually this functionality is a byproduct of some random other chip on the phone that is multifunction, usually Bluetooth. So people who don't use Bluetooth get confused/upset/paranoid/tin foil hat when their FM Radio app tells them that Bluetooth needs to be enabled to use it.
Many users who really want FM can already do it today, but it involves rooting their phone and installing something like Cyanogenmod.
So users are why we can't have nice things.
Also, on Nokia N900 they simply didn't do an app at all. Lots of them were quickly written by community and everyone was happy.
You'll listen to the radio ads instead of the streaming services' ads; mobile carriers may have special ad-revenue arrangements with such services.