However, the other harm is the recent IDScan hack which leaked 153M people's IDs. And regulation is not a solution here, we don't know how to implement a regulatory regime that will prevent these sorts of privacy disasters. Even if IDScan gets fines which kill the company (and I suspect they will not) it's not enough of a deterrent because no one will pay enough to actually provide proper security here.
Meta, Google, Anthropic, OpenAI etc can afford to pay for and deal with licensing. They also created these issues and would very much prefer not to have to mitigate the harm they do to adults (i.e. people with money to spend). Furthermore, it'd be great if they didn't have to worry about small time competitors emerging and growing too fast. Licensing under the guise of "think of the children" is perfect for them.