I don't think Google still permits Android phones to select a different default search. They used to, several Verizon phones used to ship with Bing as default, before Google locked it down via the MADA. (And this is true even of Android phones Microsoft sells, if they have the Play Store, which Microsoft's own Android apps depend on, they must follow MADA terms.)

They could on iOS, but it's likely outbidding Google would make Bing unprofitable. (Currently, it turns a profit, and has for years.) Satya Nadella doesn't seem to be a big fan of keeping products or services that don't make money on their own, hence his willingness to chop off entire arms of Microsoft's prior strategy.

It is Google mobile platform and can therefore chose whatever default they want even though they do not force it.

Just like on Windows the default search is Bing and default browser Edge just no body uses them because they suck.

Bing is even two characters less and still not used. Are we honestly going to penalize a company for creating better products?

Yep, and mozilla makes almost all of its revenue from google by setting the default search engine to google: https://en.wikipedia.org/wiki/Mozilla_Foundation#Financing

I find this funny since Google directly finances a competing browser.

Neither Firefox nor iOS are “competitors” for Google. Google’s main business is advertising and collecting data. Both Chrome and Android are means to that end. Google wants to be wherever the users are, whether that’s on Android, iOS, Chrome, or Firefox.

For years, Google made more money on iOS than Android even after Androids market share eclipsed iOS’s market share.