Is it beacuse a lot of people feel unsafe or is it because the people supposed to ensure our security see it as the "easiest" or most effective way to do their job?
Is there so much benefit to having a fuctioning mass surveilance apparatus, and if yes, who benefits of it if not the people for whom these rules for in the first place?
The issue is that Europe is behind in tech; particularly big communication networks (aka: social networks). One key element here is that the amount of taxes paid by the Facebooks and co. is ridiculously low and their importance in the economy is getting bigger and bigger. This causes a significant risk for the future.
Any attempt that we made to combat this on the technological aspect has been a complete failure.
To protect its citizen, Europe uses the biggest weapon at its disposal: regulations. The point is not to impose mass surveillance, nor is it to protect the children; the point is to hurt social networks because they are perceived as a threat (real or not). Hammer them with regulations until it's almost impossible to comply, if possible by implementing conflicting ideas (protect privacy of everyone BUT check every image for child pornography !).
The desired outcome is that: either the social network goes out of Europe, or decides to accept the fines, which more or less corresponds to what Europe believes should have been paid by a fair tax system.
Expect the exact same thing to happen with AI.
If the EU wished more competition by domestic companies, they could simply pass a law restricting the income tax by member states to not go over 50% of earned income. In my current jurisdiction, a lowly IT worker can easily pay a 66% tax rate, with 54% being paid as nominal taxes and the rest going as employer taxes. Unless you are self-employed, in which case you will get to pay your 66% with no smoke curtains in the middle.
Now add VAT to really see how little of your labour translates into purchasing power.