I think that's a fair criticism if the goal is to build a general-purpose smartphone.
But that's not what Commodore is trying to do.
The C64 Ultimate has Wi-Fi, networking, FTP, BBS access, and online services, yet intentionally omits a browser. The Callback follows the same philosophy.
At the same time, Commodore OS Vision exists. It's a Debian-based Commodore Linux distro you can install on a modern PC, and it gives you the option to install a browser or not.
It's actually very cool. You should check it out.
To me, this seems less about maximizing access to the modern web and more about encouraging a different relationship with technology and online communities.
You may disagree with that decision, but I don't see it as a flaw. I see it as a deliberate design choice. The limitation is the feature.