Infinity Ward bossman, Vince Zampella, has told the Official Playstation Magazine that originally, Activision did not want Call of Duty 4 to be a Modern Warfare and had been holding the reins on a more "modern" type of war experience for quite some time.
"With Call of Duty 2, we were dead set against it being World War 2," said Zampella. "But Activision really wanted it, the compromise sort of being that we'd get some dev kits for consoles in exchange for doing a World War 2 game. We always wanted to be on consoles and Activision saw us as more of a PC developer.
"And something I'll add to that, Activision also did not want Modern Warfare. They thought working on a modern game was risky and [thought], 'oh my god you can't do that, it's crazy!' They were doing market research to show us we were wrong the whole time."
Of course, in the end, MW1 sold 14 million copies. So, there ya go.