Super Smash Bros. Ultimate director Masahiro Sakurai said on his last livestream that Super Smash Bros. Ultimate is only for "good boys and girls".
If you happened to miss it, Nintendo added Fatal Fury's 'Terry Bogard' to Super Smash Bros. Ultimate last week, and to kick off the launch of the classic character, the game's director sat down for 45 minutes to demonstrate him. Masahiro Sakurai showcased Terry Bogard for quite some time, and when he got to the part about including some of the other Fatal Fury characters, he dropped a joke that was taken out of context.
The local translation for what he said is as follows, "By the way, you may have noticed that a very important character from the Fatal Fury series was not included. Yes, Mai Shiranui. Super Smash Bros. Ultimate is for good boys and girls of many different ages, so we decided not to feature her. Please forgive us." An image of Mai Shiranui is found in the entirety of this article, and after viewing that, you can probably understand why Nintendo decided to leave her out.
GameXplain further details why Sakurai decided to keep Mai Shiranui out of Smash Ultimate. They say that the Japanese version of the translation says that Nintendo wanted to keep their "All Ages" CERO rating intact, and including that character would certainly raise it. Super Smash Bros. Ultimate recently got updated to version 6.0.0, more on that here.