They choose to go "all in" because it is literally the only option to get an app on the devices of ~58% of smartphone owners in the United States. They don't have a choice, they literally have to accept it in this market. Even in other markets where they don't control the majority, it's still a massive portion of the market.

It's hard to imagine how the precedent established by not forcing change here would be desired by anyone. We're not far from a world where basically all of the software you can consume, how you can consume it, and even the price of it, is effectively determined (or at least heavily influenced) by one of 3 companies. We're not talking about just the services those companies offer, we're talking about all of the software services that any company wants to offer.

The cost of building a new operating system in the modern age is incredibly prohibitive, such that we're unlikely to see any meaningful competition in the form of alternatives here. Even if such a project were to happen, they'd have to overcome the incredible inertia secured from walled garden that the major players have built for their own ecosystems.