The issue is other factors may force you to use an alternate store. My college uses Proctorio for online test-taking. I am required to use this for the class. The issue is, the extension is only available for Chrome (I've tried other Chromium browsers and those don't seem to work as well). As a Firefox user, I don't really like having to switch to Chrome just to use an app that I never wanted to use but am forced to.

The same could apply with app stores—if a company, school, or other requires that you use an app that is only available on a less privacy-friendly or perhaps more intrusive app store, that doesn't sound like an optional/risk-free alternative to me. Once you open the walls there's no going back.

Maybe Apple could display a prominent warning that this may put your personal data at risk, if you choose to enable alternate stores, and remind that regularly (including during each boot, when using the apple store, etc.), giving leverage for users who actually do not want that to refuse forced installations by third parties.

An alternate app store would be a risk for tricking people to download and install all kinds of malware.

"Your iPhone is out of date. Tap here to install the latest security tools to stop hackers from stealing your bank account"

Who is to say an alternative App Store wouldn’t have better security than the Apple App Store? Lots of things with terrible privacy and security practices have made it past the mostly automated review process. With a 3rd party paid App Store, you could pay a subscription to ensure that every app is reviewed by a human, doesn’t violate privacy, and is free of malware.

Right, but the scammers aren't going to tell you to go there to install your Important Software Update, they're gonna point you towards the store with no restrictions at all, possibly one they run.

Options drive up support costs for Apple and for carriers, with no corresponding benefit for people who were uninterested in these options.