Very stringent regulation is in the interests of large businesses. They have the resources while smaller businesses do not.
We've seen this in reports after GDPR go live where Google's advertising market share went up: they had the resources to demonstrate compliance as well as a better ability to get consent (google vs random ad exchange asking for your consent.. google vs a restaurant you go to a few times a year..).
People announce good intentions and create laws and regulations embodying these intentions. They don't look at what the second and third order responses are likely to be, just at what they consider bad behavior and what looks to be a first order response to that. It is very, very hard to create laws and regulations that will have the actual effect that you intend but it is very easy to write laws that have good names and have superficial appeal.
Whether the subject is market structure, privacy, or taxation, far too many supposedly intelligent people adopt or accept the superficial response rather than the well thought through one. You wouldn't accept that approach in your code but you're happy to accept it in national and international governance.
People are then shocked that they don't obtain their desired results and argue for new, improved, superficial laws and regulations.