I think that MS and Sony and Nintendo are being misleading with their terminology as well, yes, and I hope this EU legislation applies to them as well unless they change their terminology to make it clearer at the point of sale how little control users will receive when they aren't truly buying ownership of the hardware they buy.
Nothing I am saying is intended to dissuade anyone from engaging in the transactions that we currently label as "buying" these devices; I would love the EU to force the companies to more clearly label what they're selling instead of pretending that you get ownership when you enter a restrictive walled garden, but consumers can and should still be able to knowingly and freely choose a restrictive walled garden if the labelling as such is clear.
However, the "freely" part of "knowingly and freely" is complicated in some cases - people who want to communicate with businesses, groups, and friends that rely on Facebook or WhatsApp may not truly be free to decline to sign up with Facebook or WhatsApp, since those walled gardens have very strong network effects that can unreasonably restrict those who don't wish to opt-in. If the EU forces services like Facebook and WhatsApp to support interoperability with open-source and commercial alternatives, this issue will be mitigated.
I don't think this is a strong restriction on free choice when applied to gaming consoles, since those walled gardens don't have much of an impact on daily life activities, unlike Facebook and WhatsApp in many countries/contexts.