Ubisoft thought that allowing a second player in would create story paradoxes.
Although more recent games have added well-received multiplayer modes, Assassin's Creed is a series that's in love with the single-player experience. Each game provides a long campaign with a rich story and tons of extra content. At best, sitting down to play an Assassin's Creed game is like reading a great novel, which is why fans may find it odd that this series very nearly went co-op. The original Assassin's Creed had an ambitious cooperative mode planned, but dropped it due to thematic reasons.
"We had a huge co-op component in there," explains Philippe Bergeron, the mission director for Assassin's Creed III. He reveals the rationale behind ditching cooperative play: "The engine couldn't support it, and then the metaphor we had above it didn't support it." The developers at Ubisoft decided to add a drop-in, drop-out cooperative mode to Assassin's Creed very early on in development, but as time went on, both technological and storyline considerations prevented them from doing so. "There was no way to reconcile having multiplayer or co-op in an ancestor's memories," says Bergeron. "Your ancestor lived his life in a certain way, so assuming you had branching storylines, it creates a paradox. It didn't fit."
Multiplayer did come to the series with a competitive stealth mode in Assassin's Creed: Brotherhood, but to this day, there has never been a cooperative mode in an Assassin's Creed title. As Bergeron pointed out, it wouldn't make much sense considering the ongoing story. Now that the arc in question has come to a close, though, perhaps one of the future titles will leverage the power of teamwork. You can't have a guild of assassins without a few friends.
Source: Official Xbox Magazine (UK)