Issue is that I believe even in the EU Apple is in a position where devs have to be verified by Apple to be allowed to sideload.

So it's not a problem of if sideloading is possible, but that devs need to hand over sensitive personal information to Google to be verified to be able to offer side-loaded apps on Android. So Google is positioning themselves to fully control app installs even for non Google play apps by holding the ability to deny.

So Google is now looking to emulate the terrible sideloading state of Apple by regressing to more control by them.

Rather than degoogling telling them you will go to Apple and opt for apple services is likely the more powerful response, since that is what the regular person is more likely to do. If degoogled is used they'll likely dismiss it assuming it is just one of those niche nerds. But an exodus to Apple is a threat that is more realistic.

But that makes no sense - they’ll go to someone who is even more restrictive in side loading?

Google won’t reverse this because there’s no alternative for the relatively few people this will affect. They already don’t use Google things, and Apple don’t accomodate them. They’ve got them by the balls and they know it, which is why it’s all just empty threats even from people in here.

The ones that don't sideload obviously won't care. But the ones that do are going to have little incentive to stick around if that was the main selling point for them, and the devs for non Google play apps leave because they don't want to hand over info to Google.

At that point why not go to Apple if Android no longer delivers the type of sideloading experience they desire? Apple is more polished, has longer support, battery life, and better peripherals.

And those types likely will push family to move to Apple too if they are jumping ship, since they might be the ones overseeing tech support for the family anyways.

For the next phone I get it'll be one with good custom ROM support and sticking with a degoogled device. But, if that too stops being an option because custom ROMs stall then hoping there will be a Linux Phone by then.

You seem to look at it quite pessimistically imho, but I'll try and counter

developers won’t support a third platform

We're not talking about a vastly different ecosystem. Probably Android-derived (which is open-source), very likely Linux derived. So compatibility is not going to be a huge issue, hence developing not hard. Developers will usually follow where user demand goes, not the other way around.

nor will customers move to a platform that doesn’t have the big apps that they need

Most of the big apps today have a smaller equivalent, check AlternativeTo.net.

Doubling your market share is easy when your market share is so low.

Generally true, but we're talking a growth of millions of users a year. Millions of people is no small number. 5% of the US' traffic are from Linux desktops, according to StatCounter (here's an article with many links).

Nope, not in the tens of millions

You're correct wrt. gaming, as 2.89% of 157 million active monthly users is about 4.55 million, which is not a small number either. 
If you look at Linux desktop users in the US however, we're talking over 5% of 347 million, which is 17.35 million users in the US alone, which is also not a small number. It's more than the population of Greece and Bulgaria combined.

Purely because of the steam deck (wrt. Steam Linux users growth)

Do you have numbers? I can't find any official numbers of active users on the Steam Deck, but there are estimations of 3+ million devices sold. I feel like I keep seeing posts of people who move over to Bazzite and similar distros these days for the sake of playing games, but nevertheless, both of these factors weigh in, and are steadily increasing the adaptation of Linux systems.

without [kernel level anti-cheat] it will never take off because the overwhelmingly most played games all have kernel level anti-cheat.

This is denying the antecedent. The amount of games, and money in games, without KLAC is plenty substantial to make a difference in the approach of both developers and DRMs, further increasing ease of adaptation by users. Do not undermine nor underestimate the potential of marginalities.

The type of people crying over this are not moving to iPhones lol. You know it, I know it, everyone knows it. Google know it, which is why they know they can do this with no issue.

The people crying over this are the ones who care about sideloading. So if that aspect is gone then why stick with Android? It's definitely not for Google play apps for me.

If you want to defend how Google is bigger and won't be affected you are better off pointing out that sideloading population isn't that big, and that most users don't use it so would be fine with iPhone or Android.

Side loading isn’t going away, just “anonymous” side loading. I suspect it will end up being a non-issue anyway, as simply registering as a developer through their portal so you can have your app be side loaded isn’t a big deal unless your app is doing something nefarious.

I’m not “defending” anything, let alone Google. All I'm doing is being realistic. The tiny minority of people this will affect have no alternative, and this change is likely to make very little actual change to those people anyway.

Small minority of people who care about this and end up affected will just leave for something else if custom ROMs stops being an option and dev scene dies out.

Not every Dev on F-Droid wants to hand over their info to Google.

You can argue that Google doesn't care because they are a minority and custom ROM users provide no benefit to them, which is true. But to act like people are stuck with Google if the feature they care about affects apps that interest them are stuck with Google isn't true either. They are already doing stuff that is unusual from regular users.

Don't worry mainstream won't be affected. I'm talking about the weird people sideloading, degoogling, and more likely to be running custom ROMs.