I hope it doesn't become a slippery slope where for "security" Google would start blocking undesirable or ethically/politically inconvenient apps, too.
For example, there are some medical apps that improve people's health outcomes (like custom blood glucose CGM apps and insulin pump closed loop apps for type 1 diabetics). Google does not seem to want them on the Play Store. They are undesirable apps from a business perspective – a liability with no upside.
The tech we speak about today provides the infrastructure to block these undesirable apps, as I understand. This lays the foundation of not allowing software to be installed on many consumer Android phones without Google's approval. I do hope it never comes to Google overstepping like that, but it could be optimism or naivety.
As a tool for app developers... where app developers make the decision... in this limited situation, it might be still somewhat okay. It's okay in the sense that the apps are their intellectual property and they might be entitled by law and common understanding to choose how it is distributed. But if Google ever decides to ban apps this way against the developers' wishes, it would be a massive overstep.