Side loading apps would not and does not have to be bad. iOS is protected by technical restrictions as well as ToS restrictions. A sideloaded app would not be able to grab your gps and contact list without requesting permission because those are technical restrictions. It would however be able to show adult content and 3rd party payment processing because those are ToS protections.
When I worked in ad tech I, I was tangentially a part of a project where we were working with a sister company to integrate in their app to enable data collection.
My work wished to use fine-grained location and there was concern that our integration and usage of the gps API's in an app that didn't otherwise have a good reason to use them would cause it to be rejected (apparently this had happened before). I don't know for certain whether this ended up being the case, but I would certainly believe it. If there was a 2nd App Store that didn't enforce standards in the same way as the Apple run-store, I absolutely believe ad-tech companies would go to lengths to push clients to using it so they could vacuum up more data.
Android has had sideloading for like a decade and no major app is installed via sideloading. Its entirely used for beginner developers, open source repos and piracy. The inconvenience of being out of store is bigger than the benefits of being in store. I think ultimately epic does not want the solution to be sideloading since they are having the same issues on android. They want to be on the app store and to have no fees.
