I'm talking about the part of this law that would open up the iOS's software distribution. As for how forcing interoperability can foster competition, here's a point I made in another thread.
So let's say a developer comes up with some awesome new feature for a messaging app. Today the problem exists that, in order for the app to be successful they have to work tremendously hard to try to get existing users of well-established platforms like iMessage and WhatsApp to use it. As cool as the new innovative feature may be, it's useless to a user if there's nobody else to communicate with on the app. But if interoperability is required, now suddenly the developer's users can communicate with everyone else already. While these users can't use the innovative app-specific feature with non-users of the app, they're still able to interoperate on the basics of the standard for communication, just like every other app. There's a built-in, basic, and level playing field. If the feature is really that innovative, they'll eventually be able to amass a sizable number of app users. Conversely, today because of the difficulty of the prospect of breaking through to users of established players, Apple or Google may see this new feature and decide to buy them out, with the developer taking them up on the offer because they realize the prospect of succeeding is low and it's a big payday. So now instead of "future SnapChat" some day becoming a large company of their own, it becomes just another cog in the Apple or Google machine. This is what really kills innovation. Large competitors buying up smaller, innovative ones, just to add their IP to their own portfolio. If regulation can make it more viable for smaller players to exist on their own, rather than having to count on a buyout from a FAANG company, then that's a win for both innovation and competition.