You said "no cost to developers", that part's not true. you're of course right that it's not really enough money to be relevant though.

The more cogent argument is that if apple doesn't want to spend money making their phone work with smartwatches, they do not have to make it work with smartwatches.

They want it to work with watches so users buy the phone.

If they want it to work with _only_ their watch, then sure, they make more money, but they also harm the user and market in the long-term by making it so competitors aren't on an even playing field.

Do you just kinda believe anti-competitiveness doesn't exist?

Should apple be allowed to make it so you can't communicate with android users at all to increase sales (which they already more-or-less did)? Should they intentionally make it so you can't play the music you purchased on non-apple devices by breaking "iTunes for windows"?