$99/year is literally nothing for most companies. Furthermore, Android has competing app stores, yet by far the biggest one is still the Play Store. Lots of developers (and users) did not and would not chose other distribution methods.
They are not subsidized at all.
I've seen cheaper subscription services that also come with support, hosting and services.
If we think about how App Store can actually actively help us in promoting an app, without specifically buying ad in the App Store - which doesn't cost $99/year, it costs much more - it's not exactly appealing. Epic's CEO showed how bad the App Store search is in finding apps that users specifically search for: https://twitter.com/timsweeneyepic/status/101985252700794470...
And why wouldn't it be bad? Iphone users don't have any better.