But this can also just be removed from the app stores and the developer certificates can be revoked. Due to the centralized control and distribution of software on smartphones, no smartphone based payment system is really sovereign - it only exists because the US allows it to.
Except that's a very different threat than with Credit cards. Sure Google could do that, but Europe could even just make their own android fork if they wanted and that would be far easier than replacing the whole credit card system.
And I doubt they would even need to fork Android, they could side load, or just make their own app store and require it to be installed on phones sold in the EU.
It's not a trivial task, but yes, they could and should. They could also just officially start supporting existing android alternatives such as GrapheneOS by requiring banks and government ID apps to be independent of Play Integrity, which can be done today for very little money and effort.
Sideloading is not at option from 2027 since it will be made much much more difficult than it is today, requiring users to enable it via developer options and wait 24 hours.
https://wero-wallet.eu/