What's the fun in that? It is fun if Apple is pushed from its high-horse. The day is not so far off when Apple will be paying developers to put their apps on its Appstore. Lol!
It is this rationale that actually makes it logical for Apple to compete with other developers. Think about it - you wouldn't want Spotify to be the only music streaming service in town, because then they get way too much leverage (such as threatening to pull users from the platform if Apple is unwilling to make certain concessions for them).
Apple likely saw the writing on the wall a long time ago, and has moved to ensure that it remains bigger than any one app or service in the App Store. That is perhaps one of the smartest things Apple has ever done. I would sooner lose access to google services on my iOS devices than switch to an android device. That's how married I am to the apple ecosystem, and I want every developer in the world to know this. You can choose not to support the Apple platform, and it just means you lose me (and hundreds of millions of other people like me) as a potential customer
Consequently, by having their own streaming service, Apple is like "By all means, leave the platform if you so dare. More subscribers for me". Spotify loses their biggest bargaining chip.
Same thing with Apple Arcade, where in theory, Apple could, like you said, pay developers to offer their games on the Apple Arcade service, while also making it available to users behind a paywall. If Apple can survive the loss of Fortnite (not least because games are easily the most replaceable), it can survive anything.
Just like how Apple replicates so many popular competing services from Maps to Siri to iCloud, because it's always safer to rely on your own infrastructure rather than a third party who can always pull the rug from under you at any time.
There also used to be a time when Netflix seemed indispensable and people were saying that Apple would be in trouble if Netflix ever decided to leave the platform. Now, there actually seems to be an exodus of users from Netflix, while Apple's own video streaming platform is slowly but surely gaining popularity because of the higher quality of shows found within.
In fact, a lot of "must have" apps like Facebook, Netflix and google turned out to not be so indispensable after all. Or in the very least, it seems like these companies need the iOS platform (and the value of the consumers) more than iOS needs them. As evidenced by google paying Apple to keep search default in their safari browser.
The absence of Office on the iPad wasn't enough to put a dent in its popularity, nor has it helped sales of windows tablets.
In the past, there weren't enough developers in the App Store. Currently, I feel the problem is the precise opposite. There are so many apps in the App Store right now that honestly, you could delete half of them and I would probably applaud at Apple "cleaning house" and removing the crappier apps that are simply crowding out the better ones and making it harder to locate them.
If it's a fight they want, it's a fight they will get.