Phrasing it like that that without mentioning the $40B penalty if Apple releases the feature today feels a bit off to me.

Nobody in the EU would have been upset if they said: we cannot offer this in the EU because we want to shut out competitors from providing alternative LLMs and this is not allowed in Europe. Fine. I don't care.

Many Europeans are upset that Apple blames Europe that they cannot implement this because it would sacrifice privacy. (Which is kind of ironic, because the EU has nearly the best privacy protection worldwide.)

Apple doesn't care about privacy. By default (without ADP), your (i)Messages, Drive files, contacts, calendars, backups of data from third-party apps are not end-to-end encrypted [1]. US law enforcement can request it. EU citizens are not protected because the US can use the CLOUD Act to demand the data. If Apple really cared about privacy, they would have closed that hole long ago.

[1] https://support.apple.com/en-us/102651

That's how the EU enforces its laws - a fine that hurts. How else would you like them to it?