Retro's early years before Metroid Prime were plagued with incompetent management, and lack of progress. They regularly went over budget, were understaffed for the games they had in development, and simply had too many games in development at the time. It's studio head was hardly there, and was using company money to run illegal porn sites and other scandalous activities. It was so bad that when Miyamoto and NCL reps first visited the studio, they were appalled at the sloppy development structure Retro had. After Nintendo fully acquired them, they basically had to kill those expensive projects and fire a ton of people just to make Metroid Prime the best it can be.
It seems like Nintendo has serious communication problems with Western studios when they're allowed to go off and do their own thing. From the making of Geist:
After about eight months of work, n-Space finished the prototype and sent it to Nintendo of America, from which it was sent to Nintendo. Nintendo latched onto the game, and it was decided N-Space and Nintendo would work together to develop the game. After six months, object possession was introduced in the game after some suggestions from Shigeru Miyamoto. Geist was first shown to the public at the E3 2003 and it was later stated that Geist would be released the same year. In the months after the E3 both companies realized they "weren't working on the same game"; N-Space had envisioned Geist to be a first-person shooter while Nintendo (more specifically, Kensuke Tanabe) considered it to be a first-person action-adventure. The adjustments caused the game to be delayed many times until it was finally released two years later in 2005
Retro's most recent original project being canned ... I think Nintendo and Western studios have disagreements when it comes to original IP.
When it's an established IP the developer can't really argue too much because there's an established formula to follow.