Believe me, in general I'm with you. But at the end of the day you just don't have to buy an iphone. Get an android device, flash it with Linux, buy a pinephone, do whatever you want!The problem with this argument is the same as any essential utility. At some point, it becomes impossible to live a normal life without access to a certain facility. If access is only available through a monopoly provider or a small enough number of providers that they tend to move the market in unison even if not actively collaborating, that can become a serious problem.
This is why we have government regulation of essential markets. Regulators might impose pricing limits in violation of the "free market", to prevent exploitation of vulnerable customers (and in this context, remember that most or all customers might be in that category) where competition fails to do so effectively on its own. But laws and regulations can also impose other safeguards, such as requiring honest advertising, adequate privacy and security protections, or interoperability.
I think it is no longer credible, at least in my country (the UK) and others like it, to argue that a modern smartphone is a luxury. People use their phones to access government services, shops and home delivery services, banks and financial services. They are by far the dominant communication device of our age, not just for calls but also texts, emails, numerous Internet-based communications channels. Some people no longer have any other reasonably convenient means to access those services and communications. Some of those services and channels are provided exclusively via mobile apps and simply aren't available to those who don't have a phone (which is in itself a problem, because obviously not everyone does, and this is making things very difficult for some demographics during the strange times we are living in).
This being the case, it is reasonable to argue that people should not have to choose between two dominant ecosystems for their phone when both have serious problems in areas like privacy, security, reliability and data lock-in, some of which are a direct result of the interests of the providers of those two dominant platforms, without any realistic ability for most people to protect themselves from those risks or with any such ability relying essentially on luck (for example, the availability of jailbreaks and the continued operation of essential apps despite any jailbreak that has been applied).