Leveraging their status as the controller of the platform to require support for their solution is not the same thing as their solution competing head to head with other solutions.
Note that I'm not making an argument about how to classify the behavior legally, I'm arguing that calling it "competing" is pretty generous.
The trouble here is the definition of "market". Apple's ecosystem (which Apple has an absolute control on) doesn't seem to be very safe from being defined as a sole market since there's no viable substitute to the app store for Apple users.
For instance, even if Apple decides to increase the app store fee to 50% so its app's prices as well, still consumers don't have much choice since buying a new phone is typically more expensive by order of magnitude than buying an app. This is also a part of Spotify's claim as well and Apple is trying to defend itself for this time unlike Apple v. Pepper.
I already have explained; there's no alternative to iOS for apple mobile devices unless you're willing to pay more than $500 for an equivalent level of android device. If Apple allows Android to be installed to Apple devices, then things can be different though.
In fact software monopolies on hardware isn't pretty much the standard, it's a universal reality in just about all consumer products except one—the personal computer. And even then it's exceedingly rare for a consumer to deviate from the shipped software.
"Dominant player" isn't especially relevant in European market law. Essentially the test is that you are of sufficient import to materially affect pricing in that market, which Apple definitely is.
Note that I'm not making an argument about how to classify the behavior legally, I'm arguing that calling it "competing" is pretty generous.