EDIT: I get what people are saying about the App Store fees but reputational damage does cost money, possibly quite a lot.
So this is just a PR fiasco and a way for Apple to look like a comic book villain that spites both customers and governments, at no gain to itself. If this thing Apple execs apparently fear more than the Devil himself were to actually happen then OK do the calculus and ban what you think you need to ban. But doing it now is just silly.
Apple used to be a company that was famously good at managing its image, no more it seems. A slow decline into incompetency accompanied by a relentless focus on profit maximization is a classic sign that a company has obtained illegal monopoly rents in one form or another and needs to be brought to justice
The idea being, I could travel to the EU (or just buy an EU iPhone), install a 3rd party App Store + apps, then happily use a non-Appstore iPhone outside the EU.
I don't particularly think this "infection" a big risk, but Apple sure seems to.
Billions and billions of dollars, that's why.
Say what you want about Apple’s products, but their support is top tier and a major selling point for many consumers. It’s also very expensive to provide.
Relaxing AppStore restrictions reduces both security and expected behavior the phone. People here will argue otherwise, but it is a fact. Alternative web browsers require the ability to make the most dangerous, security compromising system call that can be done by a normal app. Things will inevitably go wrong in ways that Apple cannot control, and users will seek the support they expect. Unfortunately now Apple is at the mercy of Google or whomever to release their own patches while Apple fronts the support costs for problems they didn’t create.
Losing control of the system and being unable to provide the expected level of customer satisfaction is more damaging to the brand than otherwise. Outside of tech circles, nobody cares about alternative app stores or which JIT compiler is running when they browse the web