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It doesn't really protect anything though, because you can always just use an external camera to take a picture of your screen.

Its probably meant to try mitigate damage in case bad actor gets remote access to your phone or you have malware.

Sounds like they need to spend more money on security and their "good enough" solutions aren't actually good enough.

If your phone is remotely rooted, the screenshot is providing no security.

It protects less proficient users from accidentally taking a screenshot.