Confirmed: This has been fixed in iOS 13.4 GM.
billylo
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Starting from Xcode 12 Beta 3, you can do it now.
Keeping a flag on the AppDelegate and update it in the delegate methods is not just better, but necessary now.
Using a method that requires main_thread when you are not foreground will trigger the exception reporting and sometimes hangs your app (it works most of the time, but not always). I learned it the hard way in production.
For folks who are unable to use the 2nd Info.plist file approach, I managed to upload to AppStore by configuring the Build Settings of the main target (not the watch target). There is an Info.plist Values section in the build settings (Xcode 14) and you can enter your privacy description text there. (no need for extra Info.plist file. Hope this helps.
If you are still stuck in 2024, this fixed the problem for me: Under Target, Info, Bundle Version String (short), instead of a fixed version string, change it to $(MARKETING_VERSION).