Let’s suppose you’re right that USB-C and side-loading are “superior functionality”. There must be some value to that superior functionality; consumers should be willing to pay extra for it if they value it. It seems logically like Apple ought to offer a USB-C iPhone if there is enough demand for it to generate more profit, except that it lowers the cost for customers to switch phones, which likely costs them more than they’d make in additional profit by having a USB-C version. This puts their interests at odds with the customer’s interests. There are a lot of other similar situations, e.g. most people would rather have cars that last longer, not have to deal with advertising, farmers want repairable equipment, etc., but the economics don’t work out well for the company. How does a market economy rectify that?
I’d argue that in theory, new upstarts ought to be able to enter the market and satisfy the demand if it exists. However, in many fields, there are substantial barriers to entry that prevent this. For instance, in the auto industry, it takes huge amounts of capital to reach the necessary scale, gain enough experience and reputation, etc., to be able to compete with existing companies. Similarly, it would be a monumental engineering effort to produce “iPhone with USB-C” due to the amount of intellectual property, goodwill, Silicon deals, integrations, etc., that Apple provides. It would be impossible, really, due to iMessage and FaceTime being proprietary. There could be new cable providers that don’t run ads, but they wouldn’t be able to compete on cost, and they would have trouble dealing with the regulatory environment for infrastructure, striking deals with networks, etc.
Banning companies from engaging in practices that benefit them once they become sufficiently adversarial to consumers isn’t a scalable solution. There are many instances of this across many industries; regulating them all would be like playing Whack-A-Mike. It also provides no recourse to the group of market participants who don’t care if their phone has Lightning or USB-C, and probably prefer Lightning since they already have a charger. It also leaves less room for innovation since companies will have to comply with standards, possibly preventing superior technology from being developed (that’s how we got Lightning to begin with).
I’d love to hear other/better solutions. I’ll throw one idea/observation out myself. A lot of these misalignments are because providing a better consumer experience today reduces the likelihood they will be a customer tomorrow. Either they will leverage the lower switching cost to switch, or they will be more loyal but purchase less in the future due to the increased quality. What’s a way to manipulate company economics to favor shorter-term views of the company, and disregard higher-growth plans? Higher interest rates. Maybe a higher interest rate environment could mitigate some of these issues by ensuring companies care about the business they have today, more than the one that they could have tomorrow.