It could work if they demonstrate that Apple does track its user across apps for advertising purposes without showing consent dialogs. I am more than a bit skeptical, but you never know.

Is that illegal though?

Apple isn't a monopoly -- they're a walled garden.

I'm all for regulations that force Apple to open up their hardware so that people can install different software on it, or to disable the walled-garden mode of their software platform akin to how you can install lineageOS or freedroid on android devices but I don't think it's reasonable to mandate that Apple must allow Facebook to do something with their software simply because Apple does it with theirs.

iAds will definitely be privileged. If you read the documentation on what is available to Apple vs. others, you will see Apple's own ad business will definitely benefit from this.