Apple didn't like the clear advantage Android had when it came to directions and wanted to add the feature to iOS but Google wasn't willing to just hand it over. Google wanted in-app branding and Latitude but Apple declined.
"There were a number of issues inflaming negotiations, but voice navigation was the biggest," one source familiar with Apple and Google's negotiations told AllThingsD. "Ultimately, it was a deal-breaker."
When Apple announced Maps at WWDC in June Google already knew the deal was 'sticks and rags' at that point. However, Apple may have jumped the gun a little bit.
"Apple knew it had a lot of catching up to do in maps," a person briefed on Apple's strategy told AllThingsD. "But, given what's happened the past few days, I think they felt they were farther along than they actually are."