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Apple uses their dominant position in the smartphone market to exert leverage over the smartwatch market and block other companies' access to a huge chunk of potential smartwatch buyers. Reduced addressable market->reduced potential returns->reduced investment->worse products for everyone.
This same pattern hurts Apple users as well because Apple can reduce their investment, increase prices, or both, without worrying about being beaten on quality or price.
> Most people choose to buy iPhones knowing that only certain watch options work.
This statement would be true if iPhone had 0.1% or 99.9% marketshare and is on its own irrelevant to whether or not it should be regulated. The whole point of regulating companies with dominant market positions is that they have tools to force customers into sub-optimal outcomes regardless of whether or not the customer recognizes it beforehand.
> If Apple did something anticompetitive to keep Android options from being good, then you probably have a winnable legal case. But it seems like Google, Samsung, and the other Android players are losing on their own merits.
This ignores the dozens of Smartwatch companies that don't have a smartphone business to integrate with. In your view, what should Garmin have done if the major Android players blocked 3rd party feature parity from the beginning along with Apple? Would Garmin need to make their own smartphone and OS to compete for watch sales, or would their product just not exist? Would that be good or bad for the industry?