Steam sells games which require third-party launchers to work. For example: Red Dead Redemption 2 requires the Rockstar Launcher to work (many a negative steam review regarding this), and this launcher allows you to buy other Rockstar games (The GTA franchise, LA Noire and more).

So yeah, Steam definitely allows distribution of storefronts.

I would be extremely surprised if Valve attempted to block Epic from doing that.

This is why the steam deck is a good example? The console doesn't have to be sold at a loss in order to sell games.

It would be better overall for competition for the games to be decoupled from the console. Same as with phone apps

The Steam Deck probably doesn't have much wider margins than a Switch or a Playstation. It might be sold at a profit, but the base $400 model is a pretty ridiculous deal already. Gabe Newell was upfront about the pricing process being painful for the hardware. He he also said that piracy is a services problem though, and the Steam Deck proves that in spades - if the default experience is superior, why bother with the competitors? You don't need to lock out the user to make that point.

If anything, the iPhone is the odd one out for having hardware margins that don't suck.

Nintendo also doesn't sell their consoles at a loss.