My reading of this: the EU wants to give its old fashioned SME software houses a chance with their software products, against the likes of FAANG that typically offer the software for free.
Of course this also hurts EU startups, but that does not concern Brussels because the whole EU establishment is always defending the incumbents. And this is imho one of the reasons the EU is falling behind, because incumbents don't react well to paradigm shifts. It's a losing strategy. For all its many faults the US seems to have realized a long time ago that you cannot protect incumbents at the cost of startups.
Of course this also hurts EU startups, but that does not concern Brussels because the whole EU establishment is always defending the incumbents. And this is imho one of the reasons the EU is falling behind, because incumbents don't react well to paradigm shifts. It's a losing strategy. For all its many faults the US seems to have realized a long time ago that you cannot protect incumbents at the cost of startups.