It might be illegal in the EU under the DMA. As I understand it, litigation involving Apple's equivalent is in progress, and the outcome may not be known for years.

Wrong in this context is an assertion about morality. I do think it's wrong in the context of consumer products for a vendor to attempt to override the wishes of the owner of the product outside of a few narrow exceptions. I would absolutely apply that to iOS, and I think the DMA didn't go far enough; Apple should have no ability to enforce notarization or charge fees to app developers if the device owner chooses otherwise.

I feel less strongly about game consoles because they're not as important as smartphones; they don't touch most aspects of life in modern society, and there are viable alternatives for their primary function, such as gaming on PCs. I don't like their business model and I don't own one.