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You can download any APK you like on the internet and run it without google/gov getting in the way

Yes, but the already have the power to ban apps if they wanted to. They just don't. That's the point.

No they don't?

No, that is one reason why they are pushing for these changes.

No judgement whatsoever, but for almost everyone they too will think, no big deal you only install software through stores right? Nothing changes for them, in fact they can't conceive of an alternative anymore.

That's true.

How can you judge if Google's plan is a good one? Add up the harms caused by the new rules and weigh that against the reduction in harm and see where the balance is?

I have a hard time believing the net outcome for the overall Android community would be negative.