Because they ran the numbers. It wouldn't justify the valuation their investors demand, and it would be a distraction. Ads are their only hope. Draw your own conclusions.
Have you ever worked at a company with xxxx employees? They would have to create a new product, perhaps a new business unit. The best developers may want to work on the API biz, even though it may make 1/50th of what ads make.
If you're a b2b customer paying $$ or $$$$, you would expect an SLA, customer support, etc. (think AWS). All that is expensive, and if the revenue would not be in the ballpark of ads then Twitter won't do it now. They need to find their cash cow before they can explore smaller markets.