When a quasi-monopolist threatens to exit your market ... perhaps the reason why isn't really all that important.
Sure. On the other hand, this will create societal backlash, not against Apple, but against the government. Tracy needs her iPhone.
Flippant answer aside, we need governments to learn to stand up more against the superlarge multinational companies that think they can bully their way over what a countries government thinks is good for the population. (I know a whole bunch of hand waving - elected by the people for the people that doesn't always work).
We should applaud a government for standing up though.