Primarily, the legal system, courts do. However, they always draw in expertise and considering that privacy experts don't agree on what a "privacy phone" should be, good luck defining that market when the market can't define itself. (Does it need secure boot or not? Hardened malloc? Tracker blocking? Sideloading or no sideloading? Allow background processes or not? Hardware Microphone disable switches or not? Some or all of the above?)
But then, even if there was a standard for a "privacy-preserving phone," is that market large enough to legally matter? Currently, judging by how many people are using GrapheneOS... No. Again, Apple has a monopoly on smartphones with Lightning Ports, but I don't think anybody cares about the "Smartphones with Lightning Ports" market.
In the 80s, I could literally pick up my phone and hear neighbors conversations sometimes.
Also during the analog cell phone era, anyone could buy a receiver from Radio Shack and bypass the frequency block and listen to cell phone conversations.
That’s entirely false. The majority of telephone lines were party lines through the mid 20th century.
The lack of privacy became a topic of pop culture of the time. https://en.m.wikipedia.org/wiki/Party_Wire
This is probably because when phones were first introduced in the previous century, people assumed that nobody would listen in on their conversations.
By the way, who decides what a legally recognized market is?