How is it limiting competition? Any BT headphone maker can create headphones that pair to multiple devices. What awesome features could competitors do with a headphone jack that they couldn’t do by creating headphones with a lightning end?
Try to connect your friend's generic bluetooth headphones to share audio from your iphone while connected to your airpods. Now do it with another pair of airpods. Check the list of headphones on this support page: https://support.apple.com/en-us/HT210421. All apple-owned.
The argument was that Apple was denying the ability for third parties to create a feature by excluding the headphone jack. If Apple had a headphone jack you would get this:
