They are not somehow bluffing or threatening this simply to try to change the law. It's a principled stance that they simply cannot provide E2E encrypted chat under such conditions. So either they break their protocol in which case their claimed offer would be a lie, or they leave.
Seems like the only choice they have, really. Also, by "leave EU" I'm pretty sure they mean not offer their app in the EU, so yes I think they expect their EU user base to be zero in this scenario.
The hardest to convince would be Whatsapp, but I think that Zuckerberg is one of the few big tech CEOs that still has principles, at least sometimes. I think it could happen.
"Still"? I'm not aware of a time when he's publicly shown any sort of principles.
Google or Microsoft would just give up data of their users at the first request to avoid a ban.
Sure, Meta can't * do it because of E2E, but that alone is much better than what Google does.
* without pushing a malicious update.
And I believe that is exactly what the court was demanding they do. Push an update to uncloak the users that the court determines should lose their privacy.
Hint: I'm taking Simons' role in this: They won't drop to zero.
There are already anti-circumvention mechanisms built into Signal to facilitate use in places like China and Iran, so they've shown no interest in compliance where that goes directly contrary to their mission. Should they be removed from the App Store in Europe, I imagine they'll work on making use of the EU's own push to open iOS up for alternative app stores / PWAs. (It's clear that the EU is unhappy with Apple's current take on compliance, so we can expect that to open up further.)
That's not to say that the present proposals aren't already bad enough.
They'll just be blocked from the app store for EU users and their user base in the EU will drop to near zero within a year.