They don't need it to actually be devastating. They just need sufficient fear of it.

Especially if it is finely calibrated enough that they get to continue at a slower pace, but end up with enough expensive red tape to slow down upstart competition more because of high compliance costs.

If they can't beat OpenAI etc., the second best is to near-freeze market shares in place at a lower rate of investment - hence my comparison to cloud providers where none of the big providers makes too large reductions in prices etc. because they all know they'll all lose on a price war.