[runlevel1]

In theory, when there's viable competition, a competitor will take advantage of their competitor's overly-cautious interpretation.*

But if the regulation is indeed oppressive or byzantine, everybody hurts and only the biggest survive.

*Social contagion effects on risk perception can be a confounding factor here, though.

[watwut]

Practically, this is the reason for regulation and enforcement. Absent those, only companies that dont care about customer data safety survive. There will be scandal once in a while, but safety conscious companies will still all die.