Do people really think app store approvers are doing malware analysis on apps and analyzing network traffic to approve them?

People who know better tend to have the self control not to engage. I often get baited into engaging.

There are plenty of APIs available within the sandbox that are meant to be used by developers to use for legitimate purposes. But those same APIs could be abused by malicious actors as well.

That is why Android has historically had more problems with malware even though Android apps are also sandboxed.

You could have good security with sandboxing without AppStore.

On the other hand the AppStore is full of spyware/malware (TikTok, FB, etc.) and Apple is of course doing nothing about it as it brings more user and revenues.

Not saying the situation is any better on other platform though

This is not case just about AppStore being only store. This is Apple misusing AppStore's monopoly position.

In many cases competition law allows single supplier, but they are not allowed to misuse their power. Epic makes three cases:

(1) Apple prevents other companies from setting up their own app stores;

(2) Apple prevents other companies from providing their own "payment processing" services in the market;

(3) Apple imposes an arguably unreasonably high fee upon sales in the market (30%), to the detriment of consumers.