First of all, the app store is not a level playing field. Many companies get special treatment, important apps like WeChat (which is effectively an App Store) get to ignore the rules.

A multitude of App Stores on iOS would create competition among the stores themselves. For instance, if you want to publish on the Epic Store, they only take a 15% cut, therefore games on there can be cheaper.

Lastly, who says you need to run an app store to publish apps? Being able to publish directly is viable on other platforms, after all. iOS has a good-enough security model so that even malicious apps are limited in what they can do. Apple does not and can not scan for malicious behavior within that security framework anyway.