Google's move into the mobile market space gave the consumer another choice for a mobile platform. It's is also no secret that Apple and Google work closely together on products and according to one source Apple told Google to not include multi-touch on its Android platform.
While it would be easy to ignore this "source" there seems to be quite a bit of credibility to the matter. Firstly, the G1 and Android do support multi-touch; if the phone has the hardware and software backing for the technology why wouldn't they include it? The source claims that Apple asked Google to forgo including the technology.
Besides Apple asking Google to not include multi-touch there is also a possible PR disaster waiting to happen. If Apple were to go after Palm for the Pre's multi-touch capabilities then it would have to go after Google as well. Apple and Google are tightly linked together and suing your business partner would not go over well with investors.
The real reason why multi-touch was not included in the G1 will probably be never known. The bigger question is not if, but when, will Google enable the feature for the Android platform and what will Apple do about it?