They don’t. You can still run any software you’d like. You just get warnings, so people like parents don’t just randomly open malicious programs from the internet.
App developers do know. I can't say that I've ever worked on an app where this request has been made. Neither the App Store Connect Agreement[0] nor the Apple Developer Agreement[1] stipulates that the developer can be compelled to surrender their source code.
All the relevant agreements can be found here, so if there's something that specifies this kind of overreach, I'd both be very surprised and interested.
“If you are required by law, regulation, or court order to disclose any Apple Confidential Information (which can include requests related to legal investigations or audits), you agree to give Apple prompt notice and to cooperate in seeking a protective order or confidential treatment of such information”
They haven't read the document properly. Here's the definition:
> any information disclosed by Apple to you in connection with Apple Events will be considered and referred to as “Apple Confidential Information” and are subject to the confidentiality obligations of this Agreement
The definition of Apple Events:
> As an Apple Developer, you may have the opportunity to attend certain Apple developer conferences, technical talks, and other events (including online or electronic broadcasts of such events) (“Apple Events”).
