I think you are mistaken here. Strong privacy laws in Germany are decades older than Facebook et al., and to some degree have constitutional level. Similar for other EU countries before the europization of the variants of national law (which actually weakened German privacy and consumer protection law in some minor details).
Big Ad companies have a core business model that is simply incompatible with the values implemented here. That is the whole secret of why there are so few Big Ad companies founded in the EU. Calling that anticompetitive is mistaking cause and effect.
I also think you are overestimating our ability to rationally observe, understand and predict things in society. Part of the reason why we have these laws is that it is so incredibly hard to predict the outcomes of any intervention.
Of course there is the threat of over-reach, but it's always there. On the other hand, we have plenty examples where lack of regulation lead to massive harm (environmental pollution, medical experiments, monopolies etc). So there is no easy solution, and "irrational" regulation is definitely on the spectrum of sane ones.
Evidence-based policy-making is rare because there is lots of policy-based evidence-making.
It’s the same with the US.
I hear what you're trying to say, but there are problems with this basis.
There is no clear established legal-nexus between the your purported statement of "protecting consumers", and banning the use of any data center owned by multi-national corporate entities who host protected data exclusively internal to the EU in accordance with all known EU data-protection regulations. Now to be clear, I'm not saying this is your statement or position.... but it's what you wrote.
So it boils down to a false-dichotomy; This is protectionism, but not to be confused with consumer protection. The protectionism is the kind protecting EU owned & operated data centers.
I think analogies are awful, but to give an analogy it's like banning a product sold by any multi-national corporation simply on the basis they are not originally EU multi-national corporations. For instance, banning the sale of McDonald's chicken-nuggets, because McDonald's is a foreign corporation, and then alleging the corporation violate the consumer data protection laws because the nuggets are not EU nuggets
It makes no sense because there is no causal-link or rational basis, it's all irrational. Just because irrational laws have been the norm for a while, as you say particularly in Germany, doesn't make them rational now. That's a variation of the ad-populism fallacy.