Personally, I doubt the blocking of app updates is due to failed acquisition. Yes, let’s admit the facts are Apple tried to buy FlickType, the attempt failed, FlickType is blocked from issuing updates, and Apple released keyboard for Watch 7. But let’s think from a different angle, Apple is a large corporation, all these steps were performed by different teams under different organizations.
I can image when acquisition happens, the keyboard team under software org will need to have some sort of requests to M&A(?) org, and then let them negotiate the details like price and make decisions. And app store review team is not involved in this discussion process.
For the M&A (I don’t know the actual name) org, IMO there is no incentive to block an app update due to a failed acquisition, they handle acquisitions every day and turned down offers are normal to them.
For the keyboard team, do they really want to block the app updates for a revenge? It’s possible but I think unlikely, they’re not competing with FlickType. Yes, they sherlocked the FlickType, but they don’t have the pressure to increase adoption because the native keyboard will have better experience (may not fair to developers if no API provided), and only available on watch 7.
Let’s say the keyboard team do want a revenge. Then some manager under keyboard team, which is a few levels down the tree of software org, needs to talk with another manager in app review team, which is also a few levels down of marketing org, for the blocking of updates for a specific app. Why would the manger of app review team accept such request? Imaging you’re that app store review manager, someone down the line of another org ask you to do something not only hurt the reputation of the company, but also yourself either externally or internally. Will you accept that request?
To be clear, this is my guess, and I don’t know what’s really going there, I could be wrong, and this is indeed a revenge. But my point is things may not connected as they look like.