It somehow feels wrong to tell Apple that they can't sell Apps in their own App Store.
There's nothing inherently wrong with forcing Apple to divest their in-house apps. They did it before, when they spun out Claris in 1987. Likely, it would lead to better competitors within those markets than we have now; there was a renaissance in Mac office software after Claris was formed, which unfortunately Microsoft won. Perhaps if Microsoft had also been forbidden from building apps for their own platform, we would still have functioning word processing and spreadsheet markets.
(Though remembering this time period, I can think of another problem: file formats. Having a choice between MacWrite, WordPerfect, Ami, and Microsoft Word was great. Having to share your MacWrite files with someone using Ami was miserable.)
My dad had quite a lucrative decade as a consultant moving people from Lotus to Excel, and every time he was hired the people hiring him would complain about how they were being forced to move to "crappy Excel" because of the purchasing department.
Just like people love to wear rose colored glasses and pretend that the only reason that Netscape lost was because MS was unfairly competing, forgetting that NS was so crashed prone that it was a point of nerd pride on Usenet how well an operating system could handle a Netscape crash.
If Microsoft had an edge on Windows, which was the majority of computers, then that would translate into inconvenience trying to use any non-MS product on Macs, unless everybody you dealt with used Macs.
As far as compatibility. By 1990, Apple/Claris had XTND/Apple File Exchange utilities to convert from Rxcel/Word to ClarisWorks. People knew Microsoft’s formats by then.
The Mac was its own little incompatible island back then with incompatible file formats between Mac Word/Windows Word (though they could be translated), resource forks and data forks, file types as part of the file metadata instead of file extensions, heck even text files used different line endings than either Unix or Windows. Mac users didn’t generally worry about seamless interoperability.
On the other hand, back in the day, Office could open every kind of document under the sun.