That Apple dropped the idea of E2EE cloud backup is due to the FBI is just rumour. I can easily think of a couple of other reasons why they have choosen not to do this:

1. One standard use of backups is switching devices. In case of E2EE cloud backups the old device is the key (along with your password), it is hard to get this device into the restore process on the new one and if it is lost, so is the key. Now, being able to easily transfer your data from an old iPhone to a new one is something, Apple wants even more than you. It is called customer binding. (Why is Apple using the device as part of the key for E2EE cloud services and for device encryption? If the backup would be encrypted by password only (like local backups are), unless you use a super-length password providing at least 128 bits of really random data, it wouldn’t be safe enough to lock out everyone else. With the almost unlikely case of using all ASCII printable characters in your password it would need to be 20 characters long to get 128 bits of entropy. With the more likely case of [a-zA-Z0–9] its 22 and any case no one wants to use such a thing on an iPhone keyboard. Not that unlike your iPhone a password-encrypted backup can’t be protected against brute-force password guessing attacks once an attacker gets access to the file. There is no hardware counting wrong guesses and wiping out the data in case of too many wrongs.)
2. E2EE cloud backup is bound to put additional burden on support. “We can’t help you if you can’t remember your password” is something Apple don’t want to say as support.
3. There is a better privacy option already available. If you really care about the privacy of your backups, don’t use iCloud for it. Local backups are another option. Mandantory in my company with company-provided iPhones. We are not allowed to use cloud services for anything containing company data. Given that password-based-encryption does not provide sufficient encryption key strength (see above) the security of those backups relies heavily on the access security of our local storage.