But I would agree, they're not likely to just give up on the market. Even ignoring the likelihood of similar laws everywhere else, it's too big and too tempting.
I doubt Apple will be willing to forego sales in the world's third largest economy, tbh.
To be clear: I think this is the right kind of hardball for EU to play. The stakes are high, but most outcomes are a net win for the EU. It seems like strategically good law.
If 30% of your business wants a change that means a 40% drop to all your business the smart move is to drop the customer that is 30%.
On a practical level, it might not be all that easy to stop that entirely. Sure, Apple could stop selling iPhones in the EU (and would probably close their stores altogether). But a gray (black? In this case I'm not entirely certain) market would almost certainly appear. iPhones in the EU might acquire the cachet of Cuban Cigars in the US.
I think that's what the EU is hoping for. Their technology industry completely failed in this space, so for them it makes perfect sense to simply drive competitors out of the market entirely. Worst case for them is that the international competitors actually comply.
China, India did not allow that. Hence, they already have various competitors in various tech sectors.
Virtualization? Run a hypervisor on the phone that allows running multiple virtual smartphones. Apple can provide two virtual smartphone environments, one that works like the current native iOS, and one that provides a basic smartphone that is wide open and on which you can install anything you want (maybe based on Android?). Make this second one open source so it can be a basis third parties can use to develop more virtual smartphones for iPhone hardware.
It certainly puts a huge incentive on Apple to figure out technical solutions to problems like "How do we get other browser engines on this thing without compromising a hundred OS assumptions, battery performance, or user security," but it's also possible Apple decides that's a no-go and it'll cost more than 25% of annual revenue to comply, at which point the winning market strategy is opt-out. That's fine; win-win for the EU market because it clears the playing field for a European-originated competitor to the iPhone.
ETA I forgot the third possibility: Apple decides it will cost more than 10% (and later 20%) of revenue to comply, but the 5% bump in value is still worth it and they write off non-compliance as a tax to do business in Europe. Then if the EU tries to impose structural or behavioral changes, we're back to square one on the question of whether those changes cost more than (now) 5% of Apple's revenue.