The latter was cheap and easily offset by ad views. The former is expensive, not to mention Apple has no internal prowess in this area atm.
And honestly? That's fine. One company shouldn't be "doing everything" no matter how desperately Apple wants that to be the case for itself.
They are also gradually introducing advertising to Gemini and they can upsell and cross sell their paid plans (Gemini, Google One, Youtube, Workspace) to a large pool of users across all their apps, platforms and integrations.
They can do none of that with the white label models they to rent to Apple. That's why Apple will always have to pay for it directly.
This is very different from the search deal Apple has with Google. Under that deal, Apple sends users straight to Google along with all the advertising revenue it brings. Google returns some of that revenue to Apple.