(The article itself is likely to be wrong and misinterpreting the facts, or is unnessarily hyperbole, so take it as a grain of salt. However the direction of the legislation in the EU is clear.)
It's essentially the EU eldery social democratic population voting "We do not want any innovation here." "No change is the best change." "Any change might be disruptive for our current inefficient employment markets and our voters do not want that."
The EU is already lost in the AI, or any software development race. There is no upside for the EU for any breakthroughs in the AI.
The protectionism might of course might fire back, the productivity increases somewhere else and the EU slides back on international scale of the places to do business. Losing business means less revenue and more death spiral.
On the bright side, at least this time the justification does not seem to blocking pedophiles.
The headline doesn't fit the reality about the examples being open source.