The European Union (EU) took a gamble when it enacted the General Data Protection Regulation (GDPR) and followed it with the similarly expansive Digital Markets Act and AI Act.

The EU bet that its market would be so large and valuable to tech companies that the companies would simply adapt to the harsh regulatory environment.

It turned out to be a bad bet.

In response to fines and strenuous compliance procedures, tech companies have begun to withhold their newest products.

Last month, Apple announced that it would not launch some of its latest AI technologies in the EU. Citing the “regulatory uncertainties” of the Digital Markets Act, Apple withheld several features including the much anticipated Apple Intelligence system from its European consumers. The DMA’s restrictive compliance measures presented issues to Apple’s long standing approach to product design, a closed digital ecosystem wherein Apple products are compatible with each other, by requiring companies to make software that can work on any operating system or hardware. As a result, European Apple users will have a worse user experience than their American counterparts—all thanks to government overreach.

Like Apple, Meta is calling the EU’s bluff. Last week, Meta announced that it would not release its latest multimodal AI model to the EU because of the “unpredictable nature of the European regulatory environment.” The regulation that drove Meta to this decision is the General Data Protection Regulation (GDPR), a punitive law whose enforcement has generated a record number of fines and discouraged innovation across the European Union. Meta’s decision will impact more than just European Facebook users. Any company that uses Meta’s new multimodal AI technology will not release those products to the EU’s market, further weakening the already floundering European tech industry.

The EU justified its broad regulatory framework with language of concern for the economy and the consumer. It bet that, despite its overreach, companies would be content to make a worse product or stop innovation in order to comply. The recent decisions by two of the largest and most influential tech companies in the world are strong evidence that a free market will always experience more progress and flourishing than one that employs red tape and bureaucracy.