So my iPhone 4 screen broke, I tried to fix it and then ended up getting a replacement phone from the genius bar. Long story short, is apple allowed to take my old, broken phone or not?

Essentially a kid offered me $250 to fix and sell my old broken phone. Also can sell my old glass back to the eBay seller and get my money back. Is Apple legally allowed to keep my old phone, or is it theres to keep?

Apple is legally entitled to keep your old iPhone if you are taking advantage of their replacement price. That's why they offer a reduced price; they'll take your old iPhone, refurbish it, and use it as a replacement for someone else's failed or broken iPhone. If you want to keep your old iPhone, you will have to purchase a new iPhone at full price.
Regards.

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