Technology

I’m betting they are following the letter of the law perfectly

Have you read the law, or is that just a blind bet? Spoiler, here's a quote from the legislation (Article 5, item 4):

The gatekeeper shall allow business users, free of charge, to communicate and promote offers, including under different conditions, to end users acquired via its core platform service or through other channels, and to conclude contracts with those end users, regardless of whether, for that purpose, they use the core platform services of the gatekeeper.

I bolded the most obvious point - Apple is charging a core technology fee (50 cents per user per year) even though the letter of the law is "free of charge".

More broadly, there's a fundamental problem that apps distributed are required to be submitted to Apple for approval even if they're distributed out side the store. Apple says they will check less things, but obviously they are still checking some things and will still reject some apps. Developers are also required to a "core platform service" operated by Apple in order to do that submission and pay those fees. Apple can't require that, as I read the legislation they have to allow developers to distribute apps without using or agreeing to any terms with Apple.

The legislation does allow Apple to block apps that are malware/etc - but they are going far beyond that.

They likely had their lawyers pour over things to make sure they are exploiting every possible loophole.

I don't think that's what has happened. I think they had their lawyers poor over things to find some way to avoid complying with the law in a way that will require years of ongoing investigations and lawsuits between Apple and the EU. Meanwhile the status quo continues and all apps go through the App Store.