You can have third-party Android app stores. Can you say the same about Apple? While I agree that Google has market-dominance, they are not anti-competition or anti-consumer in the same sense as Apple. Android is open source, Chrome OS is open source, etc. Google is actually providing and contributing something back to the community. Apple intentionally locks people to specific hardware and to their app store.
As a user of iOS, this is precisely why I go with Apple, and why I push my family to do the same. Particularly for the more elderly in my family, Apple's setup (by and large) prevents them from doing anything that would screw themselves over. Removing Apple's control removes my desire to be apart of that ecosystem, and I know that is true for many others outside our insular little community here.
It's not like the App Store even prevents malware anyway. All Apple does during review is run the app and watch network traffic via a proxy and ask "does this look like it's violating our rules?" There's no instrumentation and there's nothing to prevent apps from changing behavior after the review. These aren't loopholes abused just by flashlight apps but even large companies like Facebook routinely abuse them. Don't forget that you can also get code onto people's phones by providing a completely closed and never reviewed dylib to devs and they'll just include it in their apps if it solves a problem for them. This is another extremely common tactic to distribute iOS malware (and another one Facebook likes.) Also lets not forget all of the outright scams on the AppStore and the fact that it more or less prevents the sharing of community maintained software (chat apps in particular) which tend to align more closely with users interests.
There is absolutely no reason not to allow users to be able to enter an alternate App repository and push service in the settings App other than that it protects Apple's monopoly.