It didn't prohibit innovation and optimisation on PC. You just have a few form factors and the motherboard has to have the appropriate dimensions. None of the connectors on a motherboard today fit any of the hardware that was current when the ATX standard came to be except maybe a ps/2 port and a headphone jack. Having half a dozen standard phone sizes seems reasonable, along with standard sockets for CPU, GPU, memory etc. At the small sizes of a cellphone it's quite possible you'll need a special device to actually replace components, but that would be acceptable. You should also have a standard battery connector so you could e.g. buy a super thick case and a 6Ah battery.

> It didn't prohibit innovation and optimisation on PC

And PCs don't have their architecture determined by legislation, so that further proves the point.

> Having half a dozen standard phone sizes seems reasonable, along with standard sockets for CPU, GPU, memory etc

There are a lot more possible sizes or form factors, CPU and GPU aren't necessarily separate, and memory is typically either soldered-down chips or built into one of the other chips depending on quantity. Separating any of those into removable boards will necessarily make phones larger, heavier, and otherwise suboptimal.

> You should also have a standard battery connector

Modern devices often don't use a single discrete battery; they distribute battery cells through a device anywhere they fit and wire them together.

Yes, but you're ignoring the fact that there were millions of PCs manufactured that weren't ATX, and could not be upgraded.

ATX wasn't a legally mandated standard.

There's little to no innovation anyway so I don't see why this is an issue.