The free market only works when you have sufficient competition. The phone market is absolutely not trivial to enter, so your first sentence is plain and simply false.
Also, given that iphones almost already pass the requirements, where is the harm to innovation?
There are hundreds of phone choices made by 10+ manufacturers. What lack of competition are you referencing? You can still buy a flip phone if you want.
The harm to innovation is not today, but in the future for some as-of-yet built product. That is.... what innovation is...
Also, given that iphones almost already pass the requirements, where is the harm to innovation?