Falk was always quiet and shy, seemingly deferring to Luke or granting him center stage. Just as he was gaining confidence in himself and beginning to trust that he was liked (at least by Ellie) for who he was, she was murdered. An entire town that knew him from the time he was a baby doubted him. His own father questioned whether or not he killed her. Luke may have provided an alibi, but he did not provide the emotional support a best friend should have at this time. And he very easily could have cleared everything up by telling the authorities that he and Gretchen saw Ellie by the river. Falk considered Luke's parents to be just as important as his own in his life. They did not defend him.
The people he most trusted in his life burned him, doubted him, turned away from him. In spite of knowing the kind of person he had always been (studious, kind, outdoorsy, friendly), in one instant that was erased and people believed he could have been a murderer as well. I think he had had enough loss in his life and he chose not to engage on deeper levels as a means of protecting what little he had left. It was not worth the risk to expose himself to people, only to be hurt.