Large actors can do it because they have other revenue sources, and they have resources to deal with the legal matters.
I am not saying regulations are bad, they are not, but every paragraph takes a small piece of the cake. And the cake is not infinite, so at a certain point people will go away because "I earn more on doing something else".
Not exactly. The EU regional market fragmentation and domestic protectionism of each country is a way bigger nerf to scaling tech companies domestically.
That's why all EU tech unirons aim straight for the US to sell their products/services there first, and only once they reach escape velocity there, then open themselves to EU customers.
and likely Google/MSFT will deploy a copy here ran without direct interference from the US, and it'll probably chug along until the first really big lawful intercept disagreement (but there are a bunch of "mutual legal assistance treaties" so it'll take a while, and by then AI will eat us for paperclip NFTs anyway)