We’ve never had carrier-branded phones. Not one. Only thing sold has been generic phones which accepts a generic SIM.
And that’s how the market is supposed to work. Free competition on devices. Free competition on service. Customers can combine as they like.
Granted you could buy carrier-locked phones rebated through a contract, but the carrier lock was time-limited and reversible and the phone was a generic, international model.
Carrier-branded phones was definitely not a EU-wide phenomenon.
If anything the introduction of the iPhone in Europe (launched using the very confusing US carrier-model) was what started pushing carriers into attempting to making new restrictions on how people were allowed to use their (formerly unrestricted) subscriptions.
So you got it pretty much 100% backwards.
In the UK there were DEFINITELY carrier branded phones, tethering was disabled by many carriers, and you couldn't even use a regular SIM card in a non-phone device - you needed a "data sim".
I travelled around Europe for 2 years using local SIM cards - and also encountered carriers which disabled tethering.
There were even android apps specifically to work around these tethering restrictions, by making the phone act as a proxy.
The answer is money. Tethering was usually not allowed but you could buy in. You get phones for free, but only if you pay 40€+ a month for the next 2 years for something you actually don't need. E.g. some unlimited services (streaming) while your general data is capped.
I haven't been in the market for such contracts for quite a few years, this has changed a lot in recent times due to "contract-less" cheap providers gobbling up the marketshare. And these packages always disappeared over time and became standard. I don't think tethering is not allowed anywhere anymore.
