Who would've thought? This isn’t going to fly with the EU.
Article 5.3 of the Digital Markets Act (DMA): "The gatekeeper shall not prevent business users from offering the same products or services to end users through third-party online intermediation services or through their own direct online sales channel at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper."
Friendly reminder that you can sideload apps without jailbreaking or paying for a dev account using TrollStore, which utilises core trust bugs to bypass/spoof some app validation keys, on a iPhone XR or newer on iOS 14.0 up to 16.6.1. (ANY version for iPhone X and older)
Install guide: Trollstore
I think that's the rub, in my theoretical scenario, Apple is not blocking the distribution or sale of iOS applications through third-party means, they'd enforce their existing restrictions on and power over building iOS applications in the first place. Developers would absolutely still be able to distribute unsigned applications - end user iOS devices would just be unable to install them.
It sounds ridiculous to me, and as I wrote earlier, it would be a clear violation of the spirit of the DMA, but I don't see any reason why this scenario would not be technically possible for Apple to pull off.
Installation is part of distribution
They already make it hard to make an app without xcode