Why were German-speaking Austrians excluded from the German Empire formed in 1871?

The exclusion of German-speaking Austrians from the German Empire formed in 1871 was the direct result of the Seven Weeks’ War in 1866, which settled the long-standing rivalry between Prussia and Austria for hegemony over the German states.12

Under the leadership of Otto von Bismarck, Prussia sought to unify Germany under its own Hohenzollern dynasty. Following the decisive Prussian victory at the Battle of Königgrätz, the Treaty of Prague mandated the dissolution of the German Confederation, which had previously been led by Austria.12

This defeat effectively expelled Austria from German political affairs, allowing Prussia to establish the North German Confederation and eventually the German Empire, with Prussia as the dominant power. Consequently, the Austrian Habsburg monarchy was forced to reorient its focus toward its own multi-ethnic territories, leading to the Ausgleich of 1867 and the formation of Austria-Hungary.324