The technical problem is nothing like exchanging data with fitness trackers.
One of the issues here is that there are many people with strong opinions that don't understand the thing they have strong opinions about. Which is the normal state of human affairs.
Indeed but you ignore my second paragraph: they have developed (and 3rd-party audited) a way to handoff all the data (parts of your Personal Context, etc.) to their cloud servers in a privacy preserving way on-device. Why couldn't the same process could be used to handoff the data to a 3rd-party AI provider? (genuine why, if you have an understanding of the thing you have a strong opinion about I'd genuinely appreciate the answer)
It looks like Apple is framing this as a privacy issue as a marketing tactic so that consumers will blame the EU when Apple COULD implement it without endangering privacy.