They gave a perfectly valid reason a couple of years ago (which i completely agree with) as to why they dont want to add multiplayer, and basically they dont want the extra SALT in the game, so let me give you some examples...
Say someone spent 500 dollars to get some waifus and good servants and now feels ready for MP, well the truth is... he will inevitably get destroyed by people who just paid far more (several thousands) and obviously have way better teams and CEs, (which will in turn make him feel like he just wasted 500 dollars... which isnt exactly something you want for your players), not to mention F2P players will feel completely outclassed.
At the end of the day this game is basically a pay to win game, only that normally it doesnt feel like it because you are playing against the A.I and arent competing against other players, but it has something worse than your regular P2W game and its the fact that you dont get to chose what you buy, but instead its just a gacha so there can be the case of people who spent more and still cant beat other people who just had better luck, leading to even more salt, basically MP would just devolve into people getting more salty and actually calling for the nerfing of several characters (which is something DW CANT do).
They also said that they want the people to just enjoy the game as a community and not have it as a competition, which can lead to a lot of salt (because money is involved, and sometimes a LOT of it).
I agree that competitiveness can risk intoxicating the community, but nerfing and upgrading Servants specifically for MP wouldn't be a bad idea. It'd just take a lot of additional efforts from the developers to get it all balanced out due to the enormous character roster. Subdividing PvP into several segments could also help keeping things fair between players. It's really not a case of "more is worse" If someone feels their team isn't good enough for PvP, then they can simply stick to single player!
I used to play Fairy Tail. The countless flaws aside, it had an enjoyable PvP mode despite the lack of actual player involvement during battles. I constantly ranked 2nd/3rd on the leaderboards before quitting. Now I also quit FGO due in part to lack of PvP.