I normally don't post here, but I feel I'm obligated to because of the subject matter:
"Godzilla is too big"
Didn't stop the developers from seriously considering the idea, even down to unused parameters showing he would have been even bigger than Iron Giant when both Giant's and Godzilla's parameters were applied to Batman's model before Giant released, being a head taller IIRC. He was planned as the largest character in the game by far, which would fit regardless if "canon" size is roughly 50 to 100 meters.
And if the "issue" is that it would "look weird" for MonsterVerse Godzilla....there's literally another WB Godzilla to use that no one would care about any size inconsistencies due to being a cartoon.
"Rights issues with Toho"
With all the crossovers and cameos and whatever Toho greenlights all the time, this is a non-issue unless
A. The developers are so strapped for cash they can't pay Toho for licensing
B. Multiversus in particular has elements that goes against Toho's guidelines (i.e. the reason why Godzilla is unlikely to be a skin in Fortnite being because one such guideline is that Godzilla cannot be depicted holding a weapon, which I distinctly remember from discussion on the CoD crossover)
That is all.