If I don't want tight vertical integration, I could easily buy any number of Android devices.
EU regulators want to compromise vertical integration, which means depriving consumers of a legitimate choice many of them make.
No. Apple somehow convinced people that: "our products work great with each other" *must* somehow involve: "we won't let competing brands work well with our products". Slick marketing!
The EU's warning involves the iPhone's interoperability with other watches and headphones when it comes to "notifications, device pairing and connectivity" (quoting Euronews). For example, you can reply to texts from an Apple Watch, not a Garmin (it works fine on Android). That's an arbitrary software restriction.
Android is at nearly 70% OS market share: https://gs.statcounter.com/os-market-share/mobile/europe/
[I say this as a keen iOS user]
The statement doesn't make sense because people don't keep 2 phones in their pocket, or 2 smart watches, and rarely have 2 tablets that are actively used. And people definitely move between ecosystems. Choosing one excludes the other, and they have equivalents for each product type.
Hence they are direct competitors.
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The real problem is that the mobile OS & app store market is a stable duopoly.
You build good alternatives for each of those.
Ask Microsoft, who tried developing Windows Mobile after the market was taken over by iOS and Android. Or who still tries competing with Chrome without much success, despite it being pushed on Windows as the default, with annoying settings and ads included. Nevermind that they gave up developing their own engine because they couldn't keep up.
Nokia and BlackBerry found that out as well.