Creating a phone OS wouldn't actually let them compete on the same level, because you can't run anything but iOS on Apple hardware.
The only companies that actually compete at the same level as Apple and Google and Amazon, since they both create the hardware, run an OS on it, and provide a store on it. Any while it's a pain to do (and they take steps to make it not work well, even if it does work), you can install their stores on each other (Amazon Fire store on Android, and Google Play store on Kindle Fire devices).
Not to say that those companies are paragons of openness in their platforms, but Apple is quite it bit farther along the spectrum in locking down their devices, in that you can't run any software other than what they approve on them (unless you jailbreak, but I'm but sure that's legal in many jurisdictions).
> You know, actual innovation.
There are plenty of locations to innovate. Why should epic have to create an OS (which they can't actually run on the hardware the people they are trying to reach are using) just so they can try to provide a better store experience for people. They could "innovate" be being more deterministic in what they accept or reject than Apple and being cheaper. Those are innovations that many customers and developers would welcome.