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The iPhone sold at a huge profit margin before there even was a store so this is obviously false.

Only a few million iPhones were sold before the App Store (which was introduced in July 2008), as this chart shows:

https://www.statista.com/statistics/263401/global-apple-ipho...

So what?

It is a two-sided market and Apple naturally wants a bite on both ends.

You're right, it's a value add for Apple. If there were no non-Apple apps, I would not buy an iPhone.

Apple could individually negotiate with the top 1000+ apps. The question is of having a wide open marketplace with standardized rules. How many users need the long tail?

That's the opposite of a value add.

What you are describing is an unavoidable cost of doing business which Apple is entitled to charge developers for.