It's not a stretch of an imagination that Apple might cut a developer out of the app store for some abstract-defined violation of terms (as they do now) and now ALSO cut that developer from the identity/contact with their users. In total, this is almost the ultimate kill switch to push companies to adhere to their policies or risk a total shutout. This scenario might be considered overblown, if it wasn't that Apple already exercises pushy monopoly(esk) control on their ecosystem. The new identity system expands that control to now outside the Apple hardware ecosystem, possibly affecting platforms like Android.
I'm ranting here a little, but I think we should be cautious of accepting privacy as the sole reason Apple wants to enforce all app authentication to use.