If you were, however, to penalize Apple; you would need to come up with a legal differentiation between a smartphone and a game console, as well as why the game console business model is moral and legal, but the locked-in smartphone market should be immoral and illegal. Considering there's no such thing as a "general purpose computing device" in the law; you would also need to come up with a pretty good explanation why Nintendo, Sony, and Microsoft get to keep their exclusivity privileges but Apple loses theirs.

And that's a tricky nut to solve. Because you might say, "well, a smartphone can do way more than a game console." Well, that's only because the game console is so locked down - but a game console remains theoretically capable of anything a PC could do otherwise. If it wasn't for a lockout, you could install Windows on it and use it as a node in a supercomputer. Does that mean Apple would be legally fine if the smartphone was more locked down then? It's tricky.

Not really, they can just leave it up to the court's interpretation. "I know it when I see it" has been used in a court before. Just define it as a smartphone: No one is going to call a gaming console a smartphone, nor vice versa.

And applying a ruling to a specific industry isn't new either: see that Hollywood anti-trust case again. It was never applied to TV shows. Otherwise Netflix Exclusives wouldn't be a thing. Or any other "Only on Disney Channel/Cartoon Network/etc" show.

They want to have their app/game store everywhere, not just PC and smartphone.

Also, hasn’t “I know it when I see it” been criticized as a poor test since it was stated based on how arbitrary it is?

It’s been used in a court, but not too much effect; the popular source of that is a discussion of “hardcore pornography” in a concurrence to a Supreme Court decision in an obscenity case which was notable for having a majority on the ruling in the case, but no consensus by any more than two justices on either a rationale for the ruling, or (among the dissenters) on the reasons for rejecting the ruling.

1. No one is stopping developers from selling their apps in Android markets.

2. Apple hasn't attempted to prevent android app markets from existing.

3. Apple can make the argument that they own the market on merit, therefore their monopoly on selling iOS apps is legal.

4. It has to be proven this is bad for consumers. Apple is claiming their control benefits consumers, which again justifies their monopoly.

And as mentioned elsewhere, Apple may be forced to allow side-loading, but still require their 30% on all transactions. And nothing stops Apple from enforcing security policies on things like private apis on side-loaded apps.

Unfortunately I think the likely result is going to be a partial victory no one is happy with. :(

The Play Store has almost identical rules and pricing compared to the App Store, how is that a competitor?

The fact that the Play Store is similar to the App Store doesn't mean it's not competitive

You are welcomed to find another explanation, I don't see any other one.