Weight is probably a big reason. Ease of taking the shape of varying loads is another. Probably cost as well. Also you can crush a cloth pannier and not damage it. The contents are usually mostly soft stuff, at least in my experience so not prone too damage from crushing. Or at least the items that are prone to crush or impact damage can be protected by the soft items.
I'd suggest that bicycle panniers have more in common with backpacks than motorcycle panniers. At least they do in the way I use them and I'd consider soft panniers even on my motorcycle if I was to do a long camping tour on it.
If someone were to make a hard shell bicycle pannier that was as light, cheap, and durable as a cloth one it might sell, but I am not sure that even then it would be better. I'd likely still stick with soft ones.